Shares of Netflix surged over 9% after bowing out of the bidding war for Warner Bros. Discovery on Thursday. Meanwhile, Paramount stock climbed 5.2% in after-hours trading on Thursday, while WBD stock fell 1.9% following the announcement.
The move came after WBD’s board determined that a $31 per share offer from Paramount Skydance for the entire company was “superior” to Netflix’s $83 billion deal for the studio and streaming assets.
“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval,” co-CEOs Ted Sarandos and Greg Peters said in a statement. “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 pair thanked WBD leadership and the board for running a “fair and rigorous” sale process.
“We believe we would have been strong stewards of Warner Bros.’ iconic brands, and that our deal would have strengthened the entertainment industry and preserved and created more production jobs in the U.S. But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price,” Sarandos and Peters added. “We will continue to do what we’ve done for more than 20 years as a public company: delight our members, profitably grow our business and drive long-term shareholder value.”
Sarandos and Peters touted a “healthy” and “strong” business that’s growing organically and noted Netflix would spend $20 billion on films and series as it expands its entertainment offering. It also plans to resume its share repurchase program.
Netflix shares have fallen 7% year to date, 1.2% in the past month and 31% in the past six months.
The victory for Paramount CEO David Ellison comes after he submitted a total of 10 bids, launched a hostile takeover bid directly to shareholders and a proxy fight with plans to replace WBD’s board at the company’s annual meeting.
The latest bid was a $31 per share, all-cash offer that included a daily ticking fee equal to 25 cents per quarter beginning after Sept. 30, 2026. Paramount will pay a $7 billion termination fee to WBD in the event the transaction does not close due to regulatory matters and will cover a $2.8 billion termination fee to Netflix.
It also agreed to eliminate $1.5 billion in potential financing costs associated with WBD’s debt exchange offer and to exclude the performance of WBD’s Global Linear Networks business from the deal’s “material adverse affect” definition.
The Ellison family trust will provide $45.7 billion in equity financing, which Oracle co-founder Larry Ellison has agreed to backstop with a personal guarantee, including an obligation to contribute additional equity funding to the extent needed to support the solvency certificate required by Paramount’s lending banks. Bank of America Merrill Lynch, Citi and Apollo are providing a $57.5 billion debt commitment.
Paramount has said it expects to close a deal with Warner Bros. Discovery within a year, pending regulatory and shareholder approval. The company has been engaging with regulators around the globe, including the Department of Justice and European Commission.
Paramount stock is down 15% year to date, 5.9% in the past month and 29% in the past six months. WBD stock is up 1.02% year to date, 1.9% in the past month and 144% in the past six months.
