Netflix Withdraws Bid for Warner Bros. Discovery; Ellison-Backed Paramount to Acquire Media Giant

United States - Ekhbary News Agency

Netflix Withdraws Bid for Warner Bros. Discovery; Ellison-Backed Paramount to Acquire Media Giant

In a dramatic turn of events that has sent ripples through the media industry, streaming giant Netflix has officially announced its withdrawal from the bidding war for Warner Bros. Discovery (WBD). This decision effectively clears the way for Paramount, under the ownership of business magnates David and Larry Ellison, to proceed with a monumental acquisition valued at approximately $111 billion. The move signals the end of a protracted and aggressive bidding process, poised to consolidate major media and entertainment assets, including Warner Bros. studios, HBO, and CNN, under the expansive umbrella of the Ellison media empire.

Netflix's decision came after the company declined to increase its all-cash bid of $82.7 billion, which it deemed no longer financially attractive at the price required to match Paramount's latest offer. In a joint statement released on Thursday, Netflix co-CEOs Ted Sarandos and Greg Peters stated, "The transaction we negotiated would have created shareholder value with a clear path to regulatory approval. However, we’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid."

The withdrawal follows Warner Bros. Discovery's announcement on Thursday that Paramount Skydance's newest offer of $31 per share was a "superior proposal," granting Netflix a four-business-day window to present a counter-offer. However, Netflix opted not to enter another bidding round, choosing instead to exit the process rather than escalate the price beyond what it considers financially viable.

Under the terms of the original agreement, Warner Bros. Discovery would have been obligated to pay Netflix a $2.8 billion termination fee. Paramount's revised offer, significantly backed by Oracle executive chairman Larry Ellison—the world's sixth-richest individual and father of David Ellison—includes assuming this breakup fee. This signifies that Paramount, acquired just last year by David Ellison's Skydance Media with substantial financial backing from his father, will now acquire the entirety of Warner Bros. Discovery's operations.

The assets slated for transfer to Paramount's control are extensive, encompassing Warner Bros.' production studios, the prestigious HBO network, its streaming service, gaming and entertainment divisions, and a portfolio of linear television networks such as CNN, TBS, TNT, Discovery, and HGTV. The Ellison family's existing ownership of major studios, entertainment ventures, and news businesses through Paramount raises significant questions about the strategic integration and future direction of these newly combined entities.

Conversely, David Ellison has cautioned about the potential for substantial job cuts within the merged entity, a common occurrence in large-scale mergers and acquisitions. Furthermore, the ownership of the news network CBS by the Ellison family has previously generated considerable controversy. This ownership has been perceived by some as aligning favorably with the political stance of former U.S. President Donald Trump, with reports suggesting that critical coverage of his administration was either shelved or subjected to increased scrutiny by Ellison and CBS's editor-in-chief, Bari Weiss. Larry Ellison is known as a significant donor and supporter of former President Trump, a factor that could potentially influence the editorial direction of the news outlets under his control.

Netflix had initially declared its intention to acquire WBD in December, proposing nearly $83 billion for its studios and streaming service alone. Despite several hostile takeover attempts by Paramount, Warner Bros. Discovery had previously reaffirmed to its shareholders its belief that Netflix's offer was superior to Paramount's initial bid, which valued the entire company, including its linear television networks, at $108 billion. However, Paramount's latest offer, at $31 per share, escalates the valuation of WBD to approximately $111 billion.

Paramount will assume the approximately $33 billion in debt currently held by Warner Bros. Discovery as part of the deal. Larry Ellison, whose net worth is estimated at $201 billion according to Bloomberg, has committed to providing the necessary additional equity to finance Paramount's bid. Paramount's current market capitalization stands at approximately $12 billion.

The transaction is also being bolstered by a substantial debt commitment of $57.5 billion from financial institutions including Bank of America Merrill Lynch, Citi, and Apollo Global Management. This complex financing structure underscores the significant scale and financial engineering involved in this landmark media acquisition.

Following the announcement, Netflix shares saw a notable surge, climbing as much as 10% in after-hours trading in New York. Paramount shares also experienced a positive reaction, rising by 4.5%. These market movements suggest investor confidence in the strategic implications of the deal, particularly for Paramount, and Netflix's disciplined approach to capital allocation.

Ekhbary News Agency