NEW YORK (AP) \u2014\u00a0Netflix\u00a0is walking away from its offer to buy Warner Bros. Discovery\u2019s studio and streaming business, in a stunning move that effectively puts\u00a0Paramount\u00a0in a position to take over its storied Hollywood rival.<\/p>\n
On Thursday, Warner\u2019s board announced that Skydance-owned Paramount\u2019s latest offer to buy the entire company for $31 per share was superior to the agreement it had previously struck with Netflix. Warner gave Netflix four business days to come up with a counteroffer \u2014 but Netflix instead responded less than two hours later, declining to raise its proposal. It said the new price it would have to pay made the deal \u201cno longer financially attractive.\u201d<\/p>\n
\u201cWe believe we would have been strong stewards of Warner Bros.\u2032 iconic brands,” Netflix’s co-CEOs Ted Sarandos and Greg Peters said in a joint statement. “But this transaction was always a \u2018nice to have\u2019 at the right price, not a \u2018must have\u2019 at any price.\u201d<\/p>\n
A Paramount buyout of Warner Bros. Discovery\u00a0would reshape Hollywood\u00a0and the wider media landscape. And unlike Netflix \u2014 which was only eyeing Warner\u2019s studio and streaming business \u2014 Paramount wants the entire company. That means\u00a0HBO Max, cult-favorite titles like \u201cHarry Potter\u201d and\u00a0even CNN could soon find themselves under the same roof as Paramount’s CBS, \u201cTop Gun\u201d and the Paramount+ streaming service.<\/p>\n
The prospect of such a combination, which will still need the green light from both Warner shareholders and regulators, poses both antitrust concerns and questions of political influence.<\/p>\n
Netflix’s decision to walk away on Thursday marks the latest development in a monthslong, messy corporate battle over Warner’s future. Sarandos and Peters thanked Warner’s leadership despite the final outcome.<\/p>\n
Warner had repeatedly backed the deal it struck with Netflix since December right up until Thursday evening, when its board continued to recommend Netflix even while calling Paramount’s\u00a0bid\u00a0valued at about $111 billion including debt \u201csuperior.\u201d Netflix had previously put a $27.75 per share offer on the table for Warner\u2019s studio and streaming business, totaling nearly $83 billion including debt.<\/p>\n
In a statement Thursday night, CEO David Zaslav said Netflix executives had been \u201cextraordinary partners\u201d and that he wished them \u201cwell in the future.\u201d<\/p>\n
After months of a heated back and forth amid Paramount’s hostile campaign to take over Warner without the board’s blessing, Warner also changed its tune about the remaining prospective buyer.<\/p>\n
Warner’s board hasn’t officially adopted Paramount’s merger agreement yet, but once it does, Zaslav said it \u201cwill create tremendous value.\u201d He added that the company was \u201cexcited about the potential of a combined Paramount Skydance and Warner Bros. Discovery.”<\/p>\n
Paramount did not immediately respond to requests for further comment. But CEO David Ellison earlier applauded Warner’s board affirming \u201cthe superior value of our offer.\u201d<\/p>\n
A Paramount-Warner combo would combine two of Hollywood\u2019s five legacy studios that remain today, in addition to their theatrical channels. Beyond \u201cHarry Potter,\u201d Warner movies like \u201cSuperman,\u201d \u201cBarbie,\u201d and \u201cOne Battle After Another\u201d \u2014 as well as hit TV series like \u201cThe White Lotus\u201d and \u201cSuccession\u201d \u2014 would join Paramount\u2019s content library.<\/p>\n
Paramount\u2019s lineup of titles include \u201cTop Gun,\u201d \u201cTitanic\u201d and \u201cThe Godfather.\u201d And beyond CBS, it owns networks like MTV and Nickelodeon, as well as the Paramount+ streaming service.<\/p>\n
A merger between the two companies would put CNN under the same roof as CBS, which has already seen significant\u00a0editorial shifts\u00a0under new Skydance ownership. Paramount took steps to appeal to more conservative viewers in its news operations, notably with the\u00a0installation\u00a0of Free Press founder\u00a0Bari Weiss as editor-in-chief of CBS News. And if the company\u2019s takeover bid of Warner is successful, critics warn similar shifts could happen CNN, a network that has long attracted ire from Trump.<\/p>\n
\u201cAny concerns about Netflix owning Warner Bros. are only heightened by the prospect of Paramount owning all of WBD. But it might not even matter,\u201d Mike Proulx, vice president and research director at Forrester, a market research company, said in an email. \u201cPolitics are playing an outsized role in this deal, and they\u2019ve been on Paramount\u2019s side from the get\u2011go.\u201d<\/p>\n
President Donald Trump has a close relationship with the billionaire Oracle founder Larry Ellison, the father of Paramount’s CEO David Ellison who is\u00a0heavily backing\u00a0Paramount\u2019s bid to buy Warner. And Paramount’s aggressive push to acquire Warner arrived just months after Skydance closed its own\u00a0buyout of Paramount\u00a0in a contentious merger\u00a0approved just weeks\u00a0after the company agreed to\u00a0pay the president $16 million\u00a0to settle a lawsuit over editing at Paramount\u2019s \u201c60 Minutes\u201d program on CBS.<\/p>\n
Still, Trump has continued to publicly lash out at Paramount over editorial decisions at CBS\u2019 \u201c60 Minutes.\u201d And while the president previously\u00a0made unprecedented suggestions\u00a0about his involvement in seeing a Warner deal through, he’s since walked back those statements and\u00a0maintained\u00a0that regulatory approval will be up to the Justice Department.<\/p>\n
Still, top Democratic lawmakers have sounded the alarm about the Republican president’s ties to companies like Paramount and potential consequences of growing corporate power.<\/p>\n
“A handful of Trump-aligned billionaires are trying to seize control of what you watch and charge you whatever price they want,” Democratic Sen. Elizabeth Warren, a longtime antitrust hawk, said in a statement Thursday night. She also called a potential Paramount-Warner combo an \u201cantitrust disaster.”<\/p>\n
Executives at Paramount have argued that merging with Warner will allow it to compete with bigger rivals particularly in the streaming space, and bring larger content libraries for its customers. But Warren and other critics say such a merger threatens higher prices, and that a Warner takeover would only further consolidate power in an industry already run by just a few major players. Some trade groups also warn that could mean job losses and less diversity in filmmaking.<\/p>\n
When Netflix was still in the running, one of its key arguments against a Warner-Paramount tie-up was that it would combine two very similar companies: two legacy studios, two theatrical channels and two major news networks. The streaming giant said that posed a higher risk for job losses and other competition concerns.<\/p>\n
In contrast, executives from both Netflix and Warner argued at a Senate antitrust hearing earlier this month that Netflix doesn\u2019t have the same studios and film distribution that Warner does. That was \u201cone of the reasons that the Netflix offer appeals to us so much,\u201d Bruce Campbell, Warner’s chief revenue and strategy officer, told senators on Feb. 3 \u2014 noting that the company believed Netflix would not only keep Warner’s operations intact, but \u201cinvest in continued production.\u201d<\/p>\n
How regulators will respond to a Warner-Paramount deal remains to be seen. The U.S. Department of Justice has already initiated reviews, and other countries are expected to do so, too.<\/p>\n
Warner shareholders will have to be convinced, too. Beyond a higher price, Paramount has also tried to entice them by pledging to move up a\u00a0previously-promised \u201cticking fee.\u201d\u00a0The 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\u2019s agreed to pay that amount if the deal doesn\u2019t go through by the end of September. It also agreed to a regulatory termination fee of $7 billion.<\/p>\n
But Paramount is taking on billions of dollars in debt to finance its offer \u2014 something critics have warned could only increase to the likelihood of potential job losses and other restructuring down the road. Foreign sovereign wealth funds have also provided equity for the offer, drawing added scrutiny.<\/p>\n","protected":false},"excerpt":{"rendered":"
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