Warner Bros. Discovery Favors Paramount’s Acquisition Offer Over Netflix Proposal in Strategic Move

In a surprising development, Netflix has decided not to increase its bid to acquire Warner Bros. Discovery’s studio and streaming division. This decision paves the way for Paramount, owned by Skydance, to potentially absorb the iconic Hollywood entity.

On Thursday, Warner’s board revealed that Paramount’s offer surpassed the previous agreement with Netflix. In response, Netflix stated that the revised price necessary to secure Warner’s assets rendered the deal “no longer financially attractive.”

While Netflix was interested in parts of Warner’s operations, Paramount’s proposal includes acquiring the entire company, encompassing networks like CNN and Discovery. This acquisition would place CNN alongside Paramount’s CBS, merging two of the last five major studios in Hollywood.

Warner, which owns HBO Max, DC Studios, and blockbuster franchises such as “Harry Potter,” had been supportive of Netflix’s offer for several months. However, Paramount’s enhanced bid of $31 per share, combined with other favorable terms, led Warner’s board to declare it a “company superior proposal” on Thursday.

If Paramount successfully acquires Warner, it would significantly alter Hollywood and the broader media industry. With recent shifts under Skydance’s ownership, including the appointment of Free Press founder Bari Weiss at CBS News, Paramount’s influence is anticipated to expand even further should the acquisition proceed.

A Paramount-Warner combo would also combine two of Hollywood’s five legacy studios that remain today, in addition to their theatrical channels. Beyond “Harry Potter,” Warner movies like “Superman,” “Barbie,” and “One Battle After Another” – as well as hit TV series like “The White Lotus” and “Succession” – would join Paramount’s content library.

Today, Paramount’s lineup of titles include “Top Gun,” “Titanic” and “The Godfather.” And beyond CBS, it owns networks like MTV and Nickelodeon, as well as the Paramount+ streaming service.

Executives at Paramount have argued that merging will be good for consumers and the wider industry. But lawmakers and entertainment trade groups have sounded the alarm – warning that a Warner takeover would only further consolidate power in an industry already run by just a few major players. Critics say that could result in job losses, less diversity in filmmaking and potentially more headaches for consumers who are facing rising costs of streaming subscriptions as is.

Combined, that raises tremendous antitrust concerns. The U.S. Department of Justice has already initiated reviews, and other countries are expected to do so, too.

Netflix, Warner and Paramount have spent the last couple of months in a heated, public back and forth over whose deal has a better regulatory path – and offers more value for Warner shareholders. Thursday’s announcement arrived shortly after Paramount upped the ante on its offer.

Beyond increasing its proposed purchase price for Warner, the company also agreed to a regulatory termination fee of $7 billion. And Paramount pledged to move up a previously-promised “ticking fee.” The company initially said it would pay 25 cents per share for every quarter the deal drags on past the end of the year. Now it’s agreed to pay that amount if the deal doesn’t go through by the end of September, Warner said.

But Paramount is taking on billions of dollars in debt to finance its offer. And David Ellison’s father, Oracle founder Larry Ellison, is heavily backing the bid for his son’s company. Foreign sovereign wealth funds have also provided equity for the offer, drawing scrutiny.

The Ellisons also have a close relationship with President Donald Trump – bringing more politics into question. Trump previously made unprecedented suggestions about his involvement in seeing a deal through, before walking back those statements and maintaining that regulatory approval will be up to the Justice Department.

The push to acquire Warner also arrives just months after Skydance closed its own buyout of Paramount – in a contentious merger approved just weeks after the company agreed to pay the president $16 million to settle a lawsuit over editing at CBS’ “60 Minutes” program. Still, Trump has continued to publicly lash out at Paramount and “60 Minutes” since.