Netflix saw a significant surge in its premarket shares, climbing over nine percent on Friday as investors reacted positively to its decision to withdraw from the bidding war for Warner Bros Discovery. Meanwhile, Paramount experienced a roughly 10 percent increase in its shares after successfully securing some of the most coveted TV and film assets globally.
On Thursday, Netflix indicated its retreat from the bid to acquire Warner Bros. Discovery’s streaming and studio assets, citing that the deal no longer made financial sense following Paramount Skydance’s revised offer of $31 per share for the prestigious Hollywood studio. In a statement, Netflix explained that they had always maintained financial discipline, and at the revised price set by Paramount Skydance, the deal was no longer economically viable for them to match.
Warner Bros. Discovery confirmed earlier on the same day that Paramount’s updated offer of $31 per share surpassed the terms of their existing agreement with Netflix. Previously, Netflix had granted Warner Bros. a seven-day window to negotiate a “best and final offer” with Paramount.
In its revised bid, Paramount increased the termination fee in case of regulatory approval failure to $7 billion US from the initial $5.8 billion US. Paramount expressed satisfaction with the Warner Bros. board’s unanimous reaffirmation that their bid represented the superior offer.
The Ellison Trust raised its equity commitment to $45.7 billion US, supported by Larry Ellison, with additional funds available to meet Paramount’s bank solvency requirements. Debt financing of $57.5 billion US is being provided by Bank of America Merrill Lynch, Citi, and Apollo, up from the initial commitment of $54 billion US.
The potential merger faces antitrust scrutiny, particularly in Washington, given the Ellisons’ ties to President Donald Trump. California’s Attorney General Rob Bonta has signaled a potential challenge to the deal, stating the California Department of Justice’s intention to conduct a thorough investigation.
The merger between Paramount and Warner Bros would bring together two major Hollywood studios, streaming platforms (HBO Max and Paramount+), and news operations (CNN and CBS). Additionally, Ellison’s Oracle now holds a 15 percent stake in TikTok, following a deal to establish a majority American-owned joint venture to avoid a U.S. ban.
Netflix’s decision coincided with CEO Ted Sarandos’ visit to the White House, amid reports that President Trump was displeased with political remarks made by a Netflix board member. Democratic Senators Elizabeth Warren, Bernie Sanders, and Richard Blumenthal have expressed concerns about potential political influence impacting the approval process for the merger.
“This is a business deal, not a political deal,” Sarandos emphasized regarding Trump’s involvement in the matter. Warren raised suspicions of favoritism, questioning potential corruption in the merger process due to political connections with the Ellison family.
