Netflix stock surged over nine percent in premarket trading on Friday as investors reacted positively to the company’s decision to withdraw from the bidding war for Warner Bros Discovery. Meanwhile, Paramount saw a 10 percent increase in its stock price after securing the acquisition of some of the most coveted TV and film assets globally.
In a statement released on Thursday, Netflix indicated that it was stepping back from its proposal to acquire Warner Bros. Discovery’s streaming and studio assets, citing the revised offer of $31 per share from Paramount Skydance as the determining factor. The streaming giant explained that matching Paramount’s bid was no longer financially viable, leading to its decision to decline the offer.
Warner Bros. Discovery confirmed earlier in the day that Paramount’s revised offer was superior to the existing deal with Netflix. Following a seven-day waiver granted by Netflix to Warner Bros., Paramount made a counteroffer, ultimately winning the bid.
Paramount increased the termination fee in its revised bid to $7 billion US, up from the initial $5.8 billion US, in case the deal fails to receive regulatory approval. The company expressed satisfaction with the Warner Bros. board’s unanimous reaffirmation of its bid as the stronger offer.
The Ellison Trust, backed by Larry Ellison, raised its equity commitment to $45.7 billion US from $43.6 billion US, with additional funds available to meet Paramount’s bank solvency requirements. Debt financing of $57.5 billion US is being provided by Bank of America Merrill Lynch, Citi, and Apollo, up from the previous commitment of $54 billion US.
The proposed merger between Paramount and Warner Bros has raised concerns of antitrust scrutiny in Washington, particularly due to the Ellisons’ connections to President Donald Trump. California’s Attorney General Rob Bonta stated that the California Department of Justice would conduct a thorough review of the merger, with potential involvement from European regulators.
Democratic senators, including Elizabeth Warren, Bernie Sanders, and Richard Blumenthal, have expressed reservations about the deal, citing potential political influence. Paramount’s merger would bring together two major Hollywood studios, HBO Max and Paramount+ streaming platforms, as well as CNN and CBS news operations.
Netflix’s decision to step back from the bidding process came after CEO Ted Sarandos visited the White House, although he did not meet with President Trump. The president’s reported displeasure with political remarks made by a Netflix board member raised concerns about political interference in the merger process. Sarandos emphasized that the deal was purely business-related, not political.
The involvement of high-profile figures and political implications surrounding the merger have sparked discussions among lawmakers and analysts about potential conflicts of interest and regulatory challenges ahead.