Paramount Wins Battle For WBD As Netflix Drops Out

The long and winding battle for control of TNT Sports parent company Warner Bros. Discovery came to a swift and stunning end late Thursday after Netflix said it would not match Paramount’s revised offer.

The streaming giant declined to utilize its matching right, set to last four business days, after WBD said it deemed the rival bid from Paramount as the “company superior proposal.” Netflix called the current situation “no longer financially attractive.”

“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.,” Netflix co-CEOs Ted Sarandos and Greg Peters said in a joint statement. “But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”

Paramount’s revised, all-cash offer of $31 per share, plus additional enhancements, gained favor from WBD as the company’s board made its determination after “consultation with its independent financial and legal advisors.” The CBS Sports parent company made the latest offer Monday, meeting a prior deadline WBD gave with Netflix’s blessing, and WBD then said Tuesday that the bid could lead to the situation that now exists.

“We are pleased WBD’s board has unanimously affirmed the superior value of our offer, which delivers to WBD shareholders superior value, certainty, and speed to closing,” Paramount chair and CEO David Ellison said in a statement. 

In a separate earnings report, Paramount said Wednesday it views the potential deal with WBD as an “accelerant” to the remaking of its own company. 

Paramount will cover the $2.8 billion termination fee that WBD now owes Netflix for exiting their deal.

Resulting Impacts

With the forthcoming acquisition of all of WBD, a planned Discovery Global spin-off, something that would have continued in a Netflix deal, is now set to be abandoned. Instead, all of WBD will be acquired and the TNT Sports operations are set to be blended with those of CBS Sports.

The outcome will no doubt please U.S. President Donald Trump and other political conservatives, who had been much more aligned with Paramount and favored that outcome. The merger will also see the Trump-friendly Paramount leadership team gain control of WBD’s CNN, a news network that the president had long hated. Paramount’s acquisition of WBD will still require regulatory approval.

“Once our board votes to adopt the Paramount merger agreement, it will create tremendous value for our shareholders,” said WBD CEO David Zaslav. “We are excited about the potential a combined Paramount Skydance and Warner Bros. Discovery and can’t wait to get started working together telling the stories that move the world.”

Earlier Thursday, WBD’s fourth-quarter earnings report detailed a company in transition, regardless of the acquisition outcome. The loss of live NBA rights has created advertising headwinds, though WBD said they “will be more than offset by an associated improvement in operating expenses.”