Netflix backs out of bid for Warner Bros. Discovery, giving studios, HBO, and CNN to Ellison-owned Paramount

The intense bidding contest for Warner Bros. Discovery has culminated with Paramount, owned by David Ellison, emerging as the victor. On Thursday, Warner Bros. Discovery announced that a recent offer from Paramount Skydance, valued at $31 per share, was deemed a "superior proposal," prompting Netflix to have a four-day window to present a counteroffer. However, Netflix opted not to increase its all-cash bid of $82.7 billion for the storied studio, officially withdrawing from the competition. In a statement, co-CEOs Ted Sarandos and Greg Peters emphasized the potential for shareholder value and regulatory approval that their proposal had. They stated, "Yet, we remain disciplined and at the price required to match Paramount Skydance's latest offer, the deal is no longer financially appealing, so we will not be pursuing it further." As part of the original agreement, Warner Bros. Discovery is obligated to pay Netflix a termination fee of $2.8 billion to dissolve their existing contract. Paramount's enhanced bid, which has support from Larry Ellison, Oracle's executive chair and David Ellison's father, will cover this breakup fee. This transformative deal will allow Paramount to acquire the entirety of Warner Bros. Discovery, including its studios, HBO, streaming services, gaming divisions, and major television networks such as CNN and TBS. Larry Ellison's ownership has raised concerns, particularly regarding potential job reductions and the editorial direction of CBS, which has been criticized for its perceived alignment with the Trump administration. Netflix initially expressed its intent to acquire Warner Bros. Discovery in December with an offer nearing $83 billion for its studios and streaming operations alone. Despite Paramount's multiple bids, Warner Bros. Discovery had consistently believed Netflix's offer to be superior. Paramount's recent bid values Warner Bros. Discovery at approximately $111 billion, taking on about $33 billion in debt in the process. Larry Ellison, boasting a net worth of $201 billion, is set to provide additional funding for this acquisition. Additionally, the deal will be supported by a substantial $57.5 billion debt arrangement from financial heavyweights including Bank of America Merrill Lynch and Citi. Following this development, Netflix's stock surged by up to 10% in after-hours trading, while shares in Paramount rose by 4.5%.