Netflix is declining to raise its offer to buy Warner Bros. Discovery’s studio and streaming business, in a stunning move that effectively puts Paramount in a position to take over the fellow storied Hollywood giant.
On Thursday, after Warner’s board announced that Skydance-owned Paramount’s offer was superior to the agreement it had previously struck with Netflix, the streaming giant said the new price that would be required to buy Warner would make it a deal that is “no longer financially attractive.”
Unlike Netflix’s bid, Paramount wants all of Warner’s operations, including networks like CNN and Discovery. That would put CNN under the same roof as Paramount’s CBS and combine two of Hollywood’s last five remaining studios.
The owner of HBO Max, DC Studios and popular titles like “Harry Potter” had backed Netflix’s proposal for months. But after Skydance-owned Paramount upped its rival bid for the entire company to $31 per share, in addition to other revisions, Warner’s board on Thursday said that the offer “constitutes a ‘company superior proposal.’”
A Paramount buyout Warner’s business would vastly reshape Hollywood and the wider media landscape. Paramount’s CBS has seen significant editorial shifts, notably with the installation of Free Press founder Bari Weiss at CBS News, under new Skydance ownership. And if Paramount’s acquisition of Warner is successful, many expect the reach of those changes to only grow.
A Paramount-Warner combo would also combine two of Hollywood’s five legacy studios that remain today, in addition to their theatrical channels. Beyond “Harry Potter,” Warner movies like “Superman,” “Barbie,” and “One Battle After Another” — as well as hit TV series like “The White Lotus” and “Succession” — would join Paramount’s content library.
Today, Paramount’s lineup of titles include “Top Gun,” “Titanic” and “The Godfather.” And beyond CBS, it owns networks like MTV and Nickelodeon, as well as the Paramount+ streaming service.
Executives at Paramount have argued that merging will be good for consumers and the wider industry. But lawmakers and entertainment trade groups have sounded the alarm — warning that a Warner takeover would only further consolidate power in an industry already run by just a few major players. Critics say that could result in job losses, less diversity in filmmaking and potentially more headaches for consumers who are facing rising costs of streaming subscriptions as is.
Combined, that raises tremendous antitrust concerns. The U.S. Department of Justice has already initiated reviews, and other countries are expected to do so, too.
Netflix, Warner and Paramount have spent the last couple of months in a heated, public back and forth over whose deal has a better regulatory path — and offers more value for Warner shareholders. Thursday’s announcement arrived shortly after Paramount upped the ante on its offer.
Beyond increasing its proposed purchase price for Warner, the company also agreed to a regulatory termination fee of $7 billion. And Paramount pledged to move up a previously-promised “ticking fee.” The 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’s agreed to pay that amount if the deal doesn’t go through by the end of September, Warner said.
But Paramount is taking on billions of dollars in debt to finance its offer. And David Ellison’s father, Oracle founder Larry Ellison, is heavily backing the bid for his son’s company. Foreign sovereign wealth funds have also provided equity for the offer, drawing scrutiny.
The Ellisons also have a close relationship with President Donald Trump — bringing more politics into question. Trump previously made unprecedented suggestions about his involvement in seeing a deal through, before walking back those statements and maintaining that regulatory approval will be up to the Justice Department.
The push to acquire Warner also arrives just months after Skydance closed its own buyout of Paramount — in a contentious merger approved just weeks after the company agreed to pay the president $16 million to settle a lawsuit over editing at CBS’ “60 Minutes” program. Still, Trump has continued to publicly lash out at Paramount and “60 Minutes” since.
