Netflix shares rose 10 percent in extended trading.
“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,” Netflix said in a statement.
Netflix confirmed to Reuters that it was walking away from bidding for Warner Bros discovery.
The Warner Bros board still has to terminate the Netflix deal and adopt Paramount Skydance’s offer.
Earlier in the day, Warner Bros said Paramount’s revised US$31-a-share offer was superior to its existing deal with Netflix, which had offered US$27.75 per share for Warner Bros’ streaming and studio assets.
A Netflix adviser, speaking on condition of anonymity, said they had advised the streaming service to bow out of the bidding because the deal no longer made economic sense.
The adviser said Netflix was bidding against a billionaire who signalled that he was willing to pay a price viewed as irrational for Warner Bros.
“There’s no point in playing chicken with someone who won’t turn the wheel,” said the source, referring to billionaire Larry Ellison, co-founder, executive chairman and chief technology officer of Oracle and father of Paramount CEO David Ellison.
Paramount’s merger with Warner Bros would unite two major Hollywood studios, two streaming platforms (HBO Max and Paramount+) and two news operations (CNN and CBS).
The Ellisons have connections to President Donald Trump.
Still, the bid is likely to face antitrust scrutiny in Washington, foreign countries and US states including California.
Democratic Senators Elizabeth Warren, Bernie Sanders and Richard Blumenthal have worried approval of the deal could be tainted by political favouritism.
In its revised bid, Paramount raised the termination fee it would pay should the deal fail to gain regulatory approval to US$7 billion from US$5.8 billion.
The Ellison Trust is committing US$45.7 billion in equity, up from US$43.6 billion previously, backed by Larry Ellison and including any additional funds needed to satisfy Paramount’s bank solvency requirements, the firm said.
Bank of America Merrill Lynch, Citi and Apollo are providing US$57.5 billion in debt financing, increased from an earlier US$54 billion commitment.
Activist investor Ancora Holdings, which owns a small stake in Warner Bros, has also stepped up pressure on the HBO owner by saying the company did not adequately engage with Paramount. (Reuters)
Edited by Cecil Wong
