Paramount Skydance seems poised to emerge as the victor of the intense bidding war for Warner Bros Discovery after competing suitor Netflix announced it would not increase its takeover offer.
Streaming giant Netflix stated overnight in the US that the price needed to surpass Paramount’s $111 billion (£82.2 billion) bid for Warner Bros would make it a deal that is “no longer financially attractive.”
The Warner Bros board has yet to fully support the Paramount bid, as it continues to endorse the offer by Netflix, but it declared late on Thursday that the improved $31-a-share bid from Paramount submitted earlier this week was “superior.”
This effectively clears the path for Paramount to win the takeover battle, which has been ongoing for months since it first put itself up for sale last year.
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Unlike Netflix, Paramount wants to acquire all of Warner Bros’ operations, including networks such as CNN and Discovery, as well as HBO Max, DC Studios, and popular titles like Harry Potter.
They would be added to Paramount’s CBS, combining two of Hollywood’s last five remaining studios.
A Paramount acquisition of Warner’s business would significantly reshape Hollywood and the broader media landscape.
Warner Bros films such as Superman, Barbie, and One Battle After Another, along with hit TV series like The White Lotus and Succession, would join Paramount’s extensive library, which includes the Mission: Impossible and Star Trek franchises.
However, concerns have been raised by legislators and industry trade groups that further consolidation in the sector could concentrate power in the hands of a few players.
They fear this could lead to more job cuts, less diversity, and possibly higher streaming prices for consumers.
Paramount, whose approach was initially hostile, has argued that the merger would be beneficial for the industry and consumers, though it will need to pass stringent competition tests by regulators in the US and Europe.
Netflix initially agreed to buy Warner Bros’ studio and streaming business last December in a deal valued at roughly $82 billion (£61 billion), including debt.
Co-chief executives Ted Sarandos and Greg Peters said after Paramount’s latest bid: “The transaction we negotiated would have created shareholder value with a clear path to regulatory approval.
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“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.”
They added: “We believe we would have been strong stewards of Warner Bros’ iconic brands.
“But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
Dan Coatsworth, head of markets at AJ Bell, commented that Paramount's apparent victory “might be good news for people with a Netflix subscription.”
He stated: “Had it bought Warner Bros, there was a real chance that Netflix would have charged customers more to help pay for the deal by justifying the price hikes with richer content.”
Technology expert Ben Barringer at Quilter Cheviot said that Netflix’s decision to walk away was “a good outcome for everyone.”
“Netflix arguably didn’t need this deal, so it’s good to see it can now focus on what it does best – content creation, user engagement, and pricing,” he said.
He added that Paramount can now better compete with Disney but has “saddled itself with a lot of debt” as part of the deal.
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