Netflix Outbids Paramount for warner Bros. Finding in $72 Billion Deal
netflix has secured a deal to acquire Warner Bros. Discovery’s studio and streaming assets for $27.75 per share, valuing the company at $72 billion, a move that dramatically reshapes the media landscape and leaves Paramount Global empty-handed after initiating the bidding war.
Just months after gaining control of Paramount through a merger with Skydance, CEO David Ellison saw his attempt to consolidate further power in the industry thwarted. In September, Ellison sent a letter to the Warner bros. Discovery board arguing a combination of the two companies made strategic sense, in
The acquisition by Netflix eliminates a potential competitor and a dominant player, while removing a potential merger partner for both Paramount and Comcast’s NBCUniversal.
“It wasn’t for sale before, and they certainly hadn’t cleaned up the assets or separated the assets in the way they have right now,” a Netflix executive stated during a conference call following the declaration, hinting at the opportune timing of the acquisition.
The process has proven particularly lucrative for Warner Bros. Discovery CEO David Zaslav, and its shareholders. According to Equilar data, zaslav stands to gain over $554 million based on the $27.75 per share transaction price,considering his existing holdings of more than 4.2 million shares and future stock awards. Factoring in an additional 4 million shares expected in January, his total windfall is estimated to be closer to $660 million.
Shareholders have also benefited significantly. Warner Bros.Discovery stock closed at $12.54 on september 10, the day before reports surfaced of Paramount’s initial bid. By Friday morning, shares had risen nearly 3% to over $25 apiece, more than doubling the price prior to the sale process and returning to levels seen in 2022 during the initial WarnerMedia and Discovery merger. This represents a meaningful vindication for Zaslav, who has faced criticism for failing to deliver shareholder value in recent years.
Despite the setback, Paramount is not conceding defeat and may continue its pursuit of acquiring all of Warner Bros. Discovery.
Ellison’s Aggressive Strategy at paramount Skydance
As the merger between Paramount and Skydance closed in August, Ellison has aggressively reshaped the company through strategic deals and acquisitions. These include securing rights to a live-action Call of Duty film and a $7.7 billion deal for UFC rights, alongside bringing in new C-suite executives and Hollywood talent like the Duffer Brothers. However, his most ambitious endeavor – acquiring Warner Bros. Discovery – has, at least for now, fallen short.
Paramount’s legal team recently sent a letter to Warner Bros.Discovery, as first reported by CNBC, alleging that the sale process was deliberately steered towards Netflix. The company accuses WBD of failing to adequately consider its all-cash offer of $30 per share, instead favoring a predetermined sale to Netflix. Netflix initially bid $27 per share for WBD’s studio and streaming assets, surpassing Paramount’s offer and shifting the momentum of negotiations.
Paramount remains the only bidder interested in acquiring all of Warner Bros. Discovery’s assets – the film studio, streaming service, and TV networks – maintaining that its offer is superior. Paramount’s advisors valued the Discovery Global networks portfolio, which includes CNN, TNT Sports, and Discovery channels, at approximately $2 per share.
Warner Bros. Discovery, however, believes Discovery Global could be worth $3 per share or more if traded independently on the public markets. Paramount also argues that acquiring the entire company would offer tax efficiencies for shareholders and that the Netflix bid carries greater regulatory risks.Concerns about the proposed combination have been voiced, with one report indicating the Trump administration views it with “heavy skepticism.”
Paramount offered a $5 billion break-up fee in case the deal fails to gain regulatory approval, while Netflix’s bid includes a $5.8 billion break-up fee, as disclosed in a Securities and Exchange Commission filing.Paramount is now considering taking its offer directly to shareholders, potentially increasing its bid beyond the $30 per share previously offered, which would allow Netflix an possibility to match.Such a move could further benefit Warner Bros. Discovery shareholders – and Zaslav.
