Netflix communicated on Thursday afternoon that it would “decline to raise its bid for Warner Bros.” after the Warner Bros. Discovery board determined that Paramount had put forth the “superior” offer.
This announcement immediately places Paramount significantly closer to taking over CNN and the remainder of WBD’s assets.
“The transaction we structured would have delivered shareholder value with a clear path to regulatory approval,” stated Netflix Co-CEOs Ted Sarandos and Greg Peters. “However, we have always maintained discipline, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially compelling, so we are declining to match the Paramount Skydance offer.”
Netflix shares surged upwards by over 8% following the news, indicating satisfaction among some investors with the company’s decision.
This story is developing and will be updated.
Earlier Developments:
The board of directors at Warner Bros. Discovery found Paramount’s latest takeover bid to be “superior” to the existing arrangement for purchasing Warner Bros and HBO.
Warner Bros. Discovery, or WBD, has not yet terminated its agreement with Netflix. However, Netflix now has a four-business-day window to respond by revising its own proposal.
In practical terms, this means increasing the price and adjusting the terms to meet or surpass what Paramount has offered.
A representative for Netflix offered no direct comment on whether this would occur.
After the four-day period concludes, the WBD board holds the authority to terminate their deal with Netflix, which would clear the way for Paramount, should the board still deem Paramount’s offer “superior.”
Paramount’s final bid, disclosed on Tuesday, valued WBD entirely, CNN included, at $31 per share. Paramount included several deal sweeteners intended to appeal to the WBD board, notably a $7 billion “regulator termination fee.”
As WBD released its quarterly results Thursday morning, CEO David Zaslav remarked that the bidding war “resulted in eight price increases” and had “at this point achieved a 63% increase in value over the initial offer received in September, delivering significant value to WBD shareholders throughout the process.”
“We are delighted that the WBD board has unanimously affirmed the superior value of our offer, which provides WBD shareholders with superior value, certainty, and speed to close,” said Paramount CEO David Ellison in a statement.
Sarandos Visits Trump White House
Netflix Co-CEO Ted Sarandos visited the White House on Thursday for meetings—though not with the President—shortly before WBD announced the latest turn in the major merger saga.
Former President Trump had previously indicated a preference for Paramount. Furthermore, just last weekend, he publicly directed Netflix to fire board member Susan Rice, a former Obama advisor, or “face the consequences”—reigniting speculation that he might exert influence over the corporate outcome.
Should the Netflix merger proceed, some industry analysts anticipate that a Trump Department of Justice would file suit to block the deal, potentially leading to protracted legal battles.
Yet, Sarandos projects confidence in Netflix’s ability to see the deal through.
A Politico report published Wednesday detailing Sarandos’s planned visit sparked speculation about whether the Netflix head would meet the President in person. This seemingly prompted the White House on Thursday to clarify that Sarandos was not meeting directly with Trump.
“Netflix is meeting with White House staff,” a White House official informed CNN.
This coincided with Netflix’s spokesperson stating that company leadership had not initially requested a meeting with Trump.
The Netflix representative also mentioned that the staff meeting was scheduled two and a half weeks prior. This timing is notable as the battle for Warner has intensified in recent days.
The Takeover Bid
With Netflix’s permission, WBD opened a window for renewed discussions with Paramount last week, and on Tuesday, the WBD board confirmed Paramount had increased its offer to $31 per share.
Paramount offered other assurances to sweeten the deal, including the ‘$7 billion regulator termination fee,’ emphasizing Paramount’s confidence that its proposal would not be blocked by a Trump administration.
Paramount CEO David Ellison has taken several actions to foster closer ties with Trump. The two men held a private meeting at the White House earlier this month, as CNN previously reported.
Shortly after meeting Ellison, Trump told an interviewer that “I wasn’t involved” in the WBD contest, despite having previously commented on the Netflix deal saying, “I will be involved in that decision too.”
Trump also asserted that it was “extremely important that CNN be sold,” whereas the present deal with Netflix does not involve selling CNN; instead, it would be spun off into a new entity with WBD’s other cable assets.
Sarandos has visited the White House numerous times in recent months, although not always for meetings with the President.
Trump has praised Sarandos as a “great guy”—but has posted criticism of Netflix on Truth Social.
Sarandos, in turn, has complimented Trump’s interest in the entertainment industry while downplaying the criticism.
When asked about Trump’s post attacking Rice by the BBC, Sarandos responded, “This is a business deal. It is not a political deal. This deal is being executed by the U.S. Department of Justice and regulators across Europe and the world.”
The next move belongs to Netflix, given the WBD board’s resolution on Thursday afternoon.
Paramount CEO David Ellison responded, “We are delighted that the WBD board has unanimously affirmed the superior value of our offer, which provides WBD shareholders with superior value, certainty, and speed to close.”
Earlier on Thursday, as WBD released quarterly earnings, CEO David Zaslav stated that the ongoing bidding contest “resulted in eight price increases” and had “at this point achieved a 63% increase in value over the initial offer received in September, delivering significant benefit to WBD shareholders throughout the process.”
“Our priority has always been and will continue to be maximizing value and certainty while mitigating downside risks,” he added, “and the board evaluates any offer against that standard, with the goal of delivering the best deal for our shareholders.”
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