Netflix Inc (NASDAQ:NFLX) said on Thursday it will not raise its bid to acquire Warner Bros. Discovery Inc (NASDAQ:WBD) after Warner Bros. Discovery's board determined that a competing offer from Paramount Skydance Corp (NASDAQ:PSKY) qualifies as a superior proposal under the terms of the existing merger agreement between WBD and Netflix.
In a joint statement, Netflix co-CEOs Ted Sarandos and Greg Peters said the deal the company negotiated with Warner Bros. Discovery would have created shareholder value and offered a clear route to regulatory approval, but that the price required to match Paramount Skydance's latest proposal makes the transaction financially unattractive.
"We have 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," the co-CEOs said.
Warner Bros. Discovery's board reached its conclusion after consulting with independent financial and legal advisors, the company said. Warner Bros. Discovery disclosed on Monday that the Paramount Skydance proposal includes a cash purchase price of $31.00 per WBD share plus a daily ticking fee equal to $0.25 per share per quarter beginning after September 30, 2026.
The Paramount Skydance offer also provides for a $7 billion regulatory termination fee payable by PSKY if the transaction fails to close because of regulatory issues. In addition, PSKY would be responsible for paying the $2.8 billion termination fee that WBD would owe Netflix to terminate the pre-existing merger agreement between WBD and Netflix.
The proposal includes commitments tied to financing and solvency. Larry J. Ellison and an associated trust are required to contribute additional equity funding as necessary to support the solvency certificate demanded by the lending banks backing PSKY's bid. The proposal also contains a company material adverse effect definition that specifically excludes the performance of Warner Bros. Discovery's Global Linear Networks segment.
Netflix expressed appreciation to Warner Bros. Discovery CEO David Zaslav, CFO Gunnar Wiedenfels, and board members Bruce Campbell and Brad Singer for conducting what Netflix characterized as a fair and rigorous process. The company said it believed the transaction would have preserved and created production jobs in the United States while strengthening entertainment industry stewardship and the studio's brands.
At the same time, Netflix reiterated that the planned acquisition was optional rather than essential. The company described the transaction as "a nice to have at the right price, not a must have at any price," and emphasized that its business remains healthy, strong and growing organically, driven by its content slate and streaming operations.
Netflix said it will continue to invest in content, allocating roughly $20 billion this year to films and series, and will expand its offering. The company also announced it will resume its share repurchase program.
Context and implications
The immediate outcome of Warner Bros. Discovery's board determination is that Netflix will not increase its bid to the level required to match Paramount Skydance. The competing proposal carries financial features intended to address regulatory risk and to secure financing support, including a substantial regulatory termination fee and backstops from an additional equity contributor tied to that financing.
Because Warner Bros. Discovery's board acted following consultations with independent advisors, the decision carries the formal weight of the board's fiduciary review under the terms of the merger agreement with Netflix. Netflix's public statements stress discipline and the company's ongoing operating strength, while describing the acquisition as conditional on a valuation that makes strategic and financial sense.
Stakeholders named in statements
- Netflix co-CEOs: Ted Sarandos and Greg Peters
- Warner Bros. Discovery executives acknowledged by Netflix: CEO David Zaslav, CFO Gunnar Wiedenfels, Bruce Campbell and Brad Singer
- Competing bidder equity backstop: Larry J. Ellison and an associated trust