Paramount Skydance has emerged as the likely acquirer of Warner Bros. Discovery after Netflix declined to raise its offer in a months-long takeover battle for the storied Hollywood studio.
Warner Bros said Thursday that Paramount’s revised $31-per-share bid was superior to Netflix’s $27.75-per-share proposal for its streaming and studio assets.
Netflix confirmed it would not match the higher offer, sending its shares up 10% in extended trading.
The Warner Bros board must still formally terminate its existing agreement with Netflix and adopt Paramount’s proposal.
Netflix co-chief executives Ted Sarandos and Greg Peters said in a statement, "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."
They added that the company had remained disciplined and described the transaction as a "nice to have" at the right price.
A Netflix adviser, speaking on condition of anonymity, said the company was bidding against a billionaire willing to pay what was viewed as an irrational price, referring to Larry Ellison, who backs Paramount Skydance and is the father of Paramount CEO David Ellison.
Paramount increased its offer from $30 to $31 per share and agreed to pay a $7 billion termination fee if the deal fails to secure regulatory approval.
It also agreed to cover a $2.8 billion breakup fee tied to Warner Bros’ prior agreement with Netflix.
The Ellison Trust is committing $45.7 billion in equity, while Bank of America Merrill Lynch, Citi and Apollo are providing $57.5 billion in debt financing.
A merger would unite two major Hollywood studios and combine streaming platforms HBO Max and Paramount+, along with news operations CNN and CBS.
The deal is expected to face antitrust scrutiny in Washington, several U.S. states including California, and abroad.
Democratic Senators Elizabeth Warren, Bernie Sanders and Richard Blumenthal have expressed concern that approval could be influenced by political favoritism.
If approved, Paramount would take ownership of Warner Bros’ film, streaming and television assets, reshaping the entertainment landscape and likely leading to staffing cuts across Hollywood.