Netflix gives up: Paramount can buy Warner

Netflix is withdrawing from the bidding war for Warner Bros. Discovery: In a statement, Co-CEOs Ted Sarandos and Greg Peters confirm that they will not make further offers for Warner. The Warner board had previously found Paramount's latest offer superior to Netflix's.

Netflix would have had four days to counter with an also strengthened offer. But the streaming service is refraining: “We've always been disciplined,” Netflix writes in a statement. The price Paramount is now offering for Warner is no longer financially attractive for Netflix.

“We believe we would have been strong stewards of Warner Bros.' iconic brands,” Netflix continues. The deal would have strengthened the entertainment industry and created more jobs in the US. From Netflix's perspective, however, Warner has always been a “nice to have” – only a good option if the price is right.

Path cleared for Paramount

Warner Bros. could now be acquired by Paramount after all: The media company has re-entered the race with a hostile takeover bid after previous offers from Warner were rejected. The Warner board had instead reached an agreement with Netflix and insisted for weeks that Netflix would be the better partner.

The Warner board had reservations about Paramount's offer. Among other things, the low equity stake of Paramount made the board skeptical. A large part of the money is being financed by private equity firms and sovereign wealth funds from Saudi Arabia and Qatar. The private equity firm of Trump's son-in-law Jared Kushner, which was involved in the first hostile Paramount offer, has since withdrawn.

Because Paramount repeatedly improved its offer and Warner faced pressure from shareholders, the media company did enter into negotiations with Paramount. The deal structure presented at the beginning of the week provides for Paramount to pay 31 US dollars per share. Additionally, Paramount offers 7 billion US dollars in case a decided takeover does not materialize due to regulatory obstacles. The takeover still needs to be approved by antitrust authorities.

Paramount pays 2.8 billion to Netflix

The US media authority, FCC, also has a say. While Netflix was only interested in the entertainment division, including the streaming service HBO Max, Paramount wants to acquire the entire company. Paramount is therefore also interested in the news business of Warner Bros. Discovery, which includes CNN and TNT. Paramount CEO David Ellison is the son of Larry Ellison, who is close to US President Donald Trump. Republican senators accused Netflix CEO Sarandos of being “woke” a few weeks ago in a hearing.

A consolation prize for Netflix: According to the original agreement, the streaming service is now entitled to a break-up fee of 2.8 billion US dollars because the agreed deal did not materialize due to a competing offer. Paramount has assured Warner in its latest offer that it will pay this sum itself. Warner Bros. Discovery shareholders will vote on the takeover offer on March 20.

(dahe)