Paramount set to win Warner Bros takeover battle as Netflix withdraws
Paramount Skydance looks set to emerge as the winner of the intense bidding battle for Warner Bros Discovery after rival suitor Netflix said it would not raise its takeover offer.
Streaming giant Netflix said in a statement overnight in the US that the price required to top Paramount’s $111bn (£82.2bn) sweetened bid for Warner Bros would make it a deal that is “no longer financially attractive”.
The Warner Bros board has yet to give its full backing to the Paramount bid, as it still continues to recommend the offer by Netflix, but it declared late on Thursday that the sweetened 31 dollars-a-share bid from Paramount lodged earlier this week was “superior”.
It effectively paves the way for Paramount to win the takeover tussle.
Unlike Netflix, Paramount wants to buy all of Warner Bros’ operations, including networks such as CNN and Discovery, as well as HBO Max, DC Studios and popular titles such as Harry Potter.
It would see them added to Paramount’s CBS and combine two of Hollywood’s last five remaining studios.
A Paramount buyout of Warner’s business would significantly reshape Hollywood and the wider media landscape.
Warner Bros films such as Superman, Barbie, and One Battle After Another, as well as hit TV series such as The White Lotus and Succession, would join Paramount’s extensive library, including the Mission: Impossible and Star Trek franchises.
But there have been worries raised by legislators and industry trade groups that yet more consolidation in the sector would concentrate power further in the hands of a small number of players.
This could lead to more job cuts, less diversity and possibly push up streaming prices for consumers, they fear.
Paramount, whose approach was initially hostile, has argued the merger would be good for the industry and consumers, though it will need to pass stringent competition tests by regulators in the US and Europe.
Netflix had originally agreed to buy Warner Bros’s studio and streaming business last December in a deal worth roughly $82bn (£61bn) 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.
“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: “Any good TV show or film needs a twist at the end to surprise viewers, and Netflix has delivered it once again.
"Just as it looked as if Netflix had the Warner Bros deal all sewn up, it decides to walk away after Paramount upped its price for a competing offer.
“The jump in Netflix’s share price in pre-market trading says it all. Investors are happy it isn’t getting carried away in the bidding war and is showing discipline. That could win the board some brownie points.
“Netflix has come a long way through primarily organic growth augmented by a few small bolt-on deals.
"Transformational deals haven’t been Netflix’s style, and there was always a chance that buying Warner Bros could have backfired if there were cultural differences and it overpaid.”