Paramount wins Warner Bros. Discovery after Netflix exits bidding war
What's the story
The highly contested bidding war for Warner Bros. Discovery has come to an end, with David Ellison-owned Paramount emerging as the victor. On Thursday, Warner Bros. Discovery announced that Paramount Skydance's latest offer of $31 per share was a "superior proposal," giving Netflix four business days to counter. However, Netflix declined to raise its $82.7 billion all-cash bid and opted out of the deal altogether.
Decision explained
'Deal no longer financially attractive'
Netflix's co-CEOs Ted Sarandos and Greg Peters issued a statement explaining their decision. They said, "The transaction we negotiated would have created shareholder value with a clear path to regulatory approval." However, they added that at the price required to match Paramount Skydance's latest offer, the deal was no longer financially attractive. Hence, they decided not to match the Paramount Skydance bid.
Deal terms
WBD to pay $2.8 billion termination fee to Netflix
Under the original deal's terms, Warner Bros. Discovery will have to pay a $2.8 billion termination fee to Netflix for breaking the existing agreement. Paramount's revised offer, which is backed by Oracle's executive chair and David Ellison's father Larry Ellison, includes covering this breakup fee. The new deal will see Paramount acquiring all of Warner Bros. Discovery, including its studios, HBO streaming service, games and entertainment divisions, and linear television networks like CNN, TBS, TNT, Discovery, HGTV, etc.
Potential impact
Potential job cuts and political leanings raise concerns
Ellison, whose Paramount already owns major studios, entertainment, and news businesses, has warned of significant job cuts. His ownership of CBS has drawn criticism and is largely seen as a sympathetic turn toward the Trump administration, with critical reporting being shelved or facing increased scrutiny by Ellison and CBS's editor-in-chief Bari Weiss. Larry Ellison is a major donor and supporter of President Trump.
Financial details
Deal values WBD at $111 billion, includes debt assumption
Paramount's latest bid values WBD at about $111 billion. The deal also involves Paramount assuming the approximately $33 billion debt held by Warner Bros. Discovery. Larry Ellison, whose net worth is estimated at $201 billion by Bloomberg, has agreed to provide additional equity to meet Paramount's bid requirements. The deal is further supported by a $57.5 billion debt commitment from Bank of America Merrill Lynch, Citi, and Apollo Global Management, respectively.