After about three months of bidding war between Hollywood giants Netflix and Paramount Skydance to decide who would buy Warner Bros. Discovery 's operations, the deal seems to have finally come to an end. And with a real plot twist .
Warner 's board of directors informed the market on the morning of Friday, February 27th, that Paramount's offer of $31 per share for the entire company was the winning bid. In total, the company will pay $81 billion for Warner's studios and the HBO Max streaming service.
But the outlay goes beyond that. Paramount's offer includes a $7 billion termination fee in case the transaction is not completed due to regulatory issues. The company also stated that it will pay the $2.8 billion termination penalty from the initial contract signed with Netflix.
Without considering extras, Paramount's final offer, made this week, is $9 billion higher than the amount offered by Netflix in early December, which was $27.75 per share. With the new figures on the table, Netflix stated that the deal was no longer financially worthwhile.
“We have always been disciplined and, at the price required to match Paramount Skydance’s most recent offer, the deal is no longer financially attractive, so we are choosing not to match the offer,” Netflix co-CEOs Ted Sarandos and Greg Peters said in a statement.
On the one hand, the unfolding story could be positive for Netflix. Since showing interest in the deal with Warner in September, the streaming service's shares have been heavily penalized, with losses of over US$170 billion in market value. With the news of the withdrawal, shares rose about 7% in pre-market trading.
On Paramount's side, should it receive regulatory approval – which is not expected to be a simple process – the company will also control the popular television channels CNN, TNT, TBS, and Food Network, a true game-changer for the entertainment industry. Paramount stated that it intends to achieve US$6 billion in synergies with the deal.
The company may have difficulty managing this portfolio, which already includes CBS News. Since taking control of Paramount, David Ellison has made significant changes to the news channel, generating controversy in the market. Now, with two media outlets together, the problem could become even greater.
“The idea that Paramount should be allowed to control CBS and CNN should be unthinkable,” Craig Aaron, co-CEO of the media advocacy group Free Press, told The Wall Street Journal .
According to him, the new owner promised Donald Trump that he would "make sweeping changes to CNN if given the opportunity — and we know what that means."
Paramount shares rose about 10% in pre-market trading following news of the purchase confirmation.
