The board of directors of Warner Bros. Discovery has officially announced that the acquisition proposal by Paramount Skydance constitutes a “Superior Proposal,” thereby displacing the previous agreement the company held with Netflix, which has announced it will abandon its plans to acquire the historic company. In this way, WBD is preparing to integrate with Paramount, creating a giant that will unite studios, sports, and streaming platforms under one roof.
Paramount is an entertainment powerhouse, with interests ranging from classic cinema to broadcast television and streaming through Paramount+. As the owner of Paramount Pictures, it holds a legendary catalog that includes works from The Godfather to current franchises such as Mission Impossible. Within its media ecosystem, it owns the CBS network (a ratings leader in the United States and holder of NFL rights) and iconic cultural brands such as MTV, Nickelodeon, and Comedy Central. By merging with Warner Bros. Discovery, Paramount is becoming a mega-conglomerate, combining the prestige of HBO, CNN’s informational scale, and the DC Comics universe, among others.
Back in the distant month of December, we shared how Netflix had announced a definitive agreement to acquire the entirety of Warner Bros. Discovery, including its film and television studios, the premium channel HBO and its streaming platform HBO Max. The acquisition, valued at a total enterprise value of approximately $82.7 billion (about €71 billion), would have marked the merger of two giants and a monumental shift in the content strategy of the streaming leader.
Honestly, and despite the very uncertain environment in which we currently find ourselves, everything seemed to indicate that the deal was finalized, especially seeing how Netflix used the term “definitive” in reference to it.
We were mistaken.
As Warner Bros. has explained, the winning offer from Paramount values Warner’s equity at approximately $81 billion, though when factoring in the assumption of the company’s net debt, the total value of the transaction rises to approximately $111 billion. As a consequence of the previous agreement’s termination, Paramount Skydance will pay Netflix a termination fee of $2.8 billion.
For its part, Netflix explained in a statement that “it has declined to increase its offer for Warner Bros. Netflix had previously received notification from Warner Bros. Discovery (WBD) indicating that its Board of Directors has determined that the most recent proposal from Paramount Skydance (PSKY) constitutes a ‘Superior Proposal’ under the terms of the existing merger agreement between WBD and Netflix.”
The transaction we negotiated would have generated value for shareholders, with a clear path to regulatory approval. However, we have always maintained discipline, and at the price required to match the most recent offer from Paramount Skydance, the transaction is no longer financially attractive, so we have declined to match Paramount Skydance’s offer.
(…) We believe we would have been strong stewards of the iconic Warner Bros. brands and that our transaction would have strengthened the entertainment industry, preserving and creating additional production jobs in the United States. However, this transaction was always a ‘good opportunity’ at the right price, not an ‘essential’ at any price.
Netflix’s business remains healthy, solid, and is growing organically, driven by our programming and our first-class streaming service. This year, we will invest approximately $20 billion in quality films and series and expand our entertainment offerings. In line with our capital allocation policy, we will also resume our share repurchase program.”
Now we enter the realm of speculation… and intrigue, as notable names such as Donald Trump are involved. According to several sources, Netflix’s withdrawal coincides with significant political tension involving the White House. After threats from Donald Trump, who demanded the dismissal of an executive board member due to her Democratic background, and criticism from Republican senators accusing Netflix of being “progressive”, the Trump Administration has shown clear preference for the Paramount proposal. Possibly, this climate of political hostility transformed what was a strategic aspiration for Netflix into an excessive risk, forcing the company to withdraw.
But there is more.
Behind the winner of this multi-billion dollar bidding war is David Ellison, son of Larry Ellison (Oracle), one of the most prominent technology leaders close to Trump (since his involvement in the Stargate Project during this second term as President. and partial owner of the new TikTok United States entity. Now, after acquiring Paramount through a small production company (Skydance), the Ellison family has managed to outmaneuver Netflix with an aggressive counteroffer, positioning themselves as the new global benchmark in the entertainment sector.
Image: Gemini
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