In a surprising twist surrounding the high-stakes bidding war for Warner Bros. Discovery, Netflix announced it would not increase a counteroffer for the company’s studio and streaming assets.
Paramount now has a much clearer path to landing the deal and consolidating the two companies.
Netflix’s Decision
After Paramount’s new deal for $31 per share, Netflix had four business days to revise its bid. However, Netflix decided to walk away from its agreement/bid for Warner Bros. Discovery after WBD’s board deemed the higher Paramount offer superior.
This now opens the doors for Paramount to pursue the company.
Netflix declined to raise its price on financial-discipline grounds. Netflix stated, “The deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid.”
However, it is not an immediate win for Paramount. The regulatory review process will take several months at a minimum. But, if there are no surprises between either company, the two prominent companies will be one.
Paramount’s Better Deal
Paramount had previously mentioned it would go higher than its $30-per-share proposal. In the newest deal, they placed a value at $31 per share.
Paramount also included several advantages to WBD taking their deal, including a $7 billion “regulatory termination fee.” They also accepted all the key terms WBD requested.
This is just one of many price increases to acquire WBD, with WBD CEO David Zaslav saying the bidding war had “led to eight price increases” and “thus far achieved a 63% increase in value versus the first offer received in September, delivering significant value for WBD shareholders throughout the process.”
Announcement
WBD CEO David Zaslav wished Netflix well after they stepped away from the deal, while also extending open arms towards Paramount after their new deal.
“Once our Board votes to adopt the Paramount merger agreement, it will create tremendous value for our shareholders.” This reflects WBD’s stock price more than doubling during the bidding war.
Zaslav added, “We are excited about the potential of a combined Paramount Skydance and Warner Bros. Discovery and can’t wait to get started working together telling the stories that move the world.”
Stocks Shifting
With the announcement came the shifting of stock prices. Netflix’s shares jumped more than 10% in extended trading, while Paramount’s rose as much as 5%. However, WBD’s stock fell 1.39%.
The surge in Netflix’s shares could be a result of relieved investors.
As for the broader media implications, there could be a major shift in studio streaming and how the current media between the two companies is managed.
We’ll just have to wait and see, until after the deal is complete, how it will affect viewers and streaming services.