Netflix stock prices surged over nine percent in premarket trading on Friday as investors celebrated the company’s decision to withdraw from the bidding war for Warner Bros Discovery. Meanwhile, Paramount saw a ten percent increase in its shares after securing the acquisition of some of the most sought-after TV and film assets globally.
On Thursday, Netflix indicated its retreat from the bid to purchase Warner Bros Discovery’s streaming and studio assets, citing the revised offer of $31 per share from Paramount Skydance as the determining factor. In a statement, Netflix expressed that matching Paramount Skydance’s latest offer was not financially appealing, leading to their decision to decline the bid.
Warner Bros Discovery acknowledged earlier in the day that Paramount’s revised offer of $31 per share surpassed the existing deal with Netflix. Previously, Netflix had granted Warner Bros a seven-day waiver to seek a “best and final offer” from Paramount.
In its initial deal in December, Netflix had agreed to a transaction valued at $27.75 per share for Warner Bros’ streaming and studio assets. The company had envisioned that their offer, combined with the divestiture of Warner Bros’ cable assets, would generate greater value for shareholders.
Paramount enhanced its bid by increasing the termination fee to $7 billion US in case the deal encountered regulatory obstacles, up from the original $5.8 billion US. The board of Warner Bros reaffirmed Paramount’s bid as the superior offer.
The Ellison Trust raised its equity commitment to $45.7 billion US, supported by Larry Ellison, with additional funds available to meet Paramount’s bank solvency requirements. Bank of America Merrill Lynch, Citi, and Apollo increased their debt financing to $57.5 billion US from the previous commitment of $54 billion US.
Paramount’s CEO, David Ellison, the son of Larry Ellison, faces antitrust scrutiny in Washington for the merger, with potential objections from California’s Attorney General Rob Bonta. Democratic senators, including Elizabeth Warren, Bernie Sanders, and Richard Blumenthal, expressed concerns about the deal possibly being influenced by political favoritism.
The merger between Paramount and Warner Bros would unite two significant Hollywood studios, streaming platforms, and news operations. Additionally, Ellison’s Oracle now holds a 15 percent stake in TikTok, following a deal to establish a majority American-owned joint venture with ByteDance, the Chinese owner of the popular video-sharing app.
Netflix’s announcement came after CEO Ted Sarandos visited the White House, although he did not meet with President Trump. The president had reportedly demanded the removal of Netflix board member Susan Rice due to her political remarks. Sarandos emphasized that the deal was purely business-related and not political.
Democratic senators raised questions regarding potential political interference in the merger approval process, highlighting concerns of favoritism towards the Ellison family.