Netflix Declines to Raise Offer for Warner Bros. Acquisition

Hours after Warner Bros. Discovery’s board said that Paramount’s latest proposal is superior, Netflix declined to raise its offer, paving the way for Paramount to win the drawn-out battle.

The revised Paramount proposal, which was disclosed to WBD on February 24, includes a purchase price of $31 per share in cash, plus a ticking fee equal to $0.25 per share per quarter beginning after September 30. Also, the proposal states that Paramount will pay a $7 billion regulatory termination fee in the event the transaction does not close due to regulatory matters. Paramount will also pay the $2.8 billion termination fee that WBD is required to pay to Netflix to terminte its existing merger agreement.

Warner Bros. Discovery determined this to be superior to the initial deal it signed with Netflix, worth $27.75 per share.

“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval,” Netflix co-CEOs Ted Sarandos and Greg Peters said in a statement. “However, we’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid.

“Warner Bros. is a world-class organization, and we want to thank David Zaslav, Gunnar Wiedenfels, Bruce Campbell, Brad Singer and the WBD board for running a fair and rigorous process. We believe we would have been strong stewards of Warner Bros.’ iconic brands and that our deal would have strengthened the entertainment industry and preserved and created more production jobs in the U.S. But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.

“Netflix’s business is healthy, strong and growing organically, powered by our slate and best-in-class streaming service. This year, we’ll invest approximately $20 billion in quality films and series and will expand our entertaining offering. Consistent with our capital allocation policy, we’ll also resume our share repurchase program.

“We will continue to do what we’ve done for more than 20 years as a public company: delight our members, profitably grow our business and drive long-term shareholder value.”

David Zaslav, president and CEO of Warner Bros. Discovery, commented, “Netflix is a great company, and throughout this process Ted, Greg, Spence and everyone there have been extraordinary partners to us. We wish them well in the future. Once our board votes to adopt the Paramount merger agreement, it will create tremendous value for our shareholders. We are excited about the potential of a combined Paramount Skydance and Warner Bros. Discovery and can’t wait to get started working together telling the stories that move the world.”

Samuel A. Di Piazza, Jr., chair of the Warner Bros. Discovery board of directors, added, “I am extremely proud of the rigorous process this board has run over the past five-and-a-half months that has led us to the cusp of combining these two storied companies and the excitement it will bring to audiences for many years to come.”