Warner Bros. Favors Revised Paramount Offer; Netflix Gives Up, Sending Stock Soaring

Warner Bros. Discovery (WBD) late Thursday deemed Paramount Skydance’s (PSKY) latest offer to be superior to the one it had in hand from Netflix (NFLX). Netflix quickly declined to match or beat Paramount’s revised offer.

Warner Bros. stock fell modestly in premarket trade. Paramount and Netflix stock jumped.

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Netflix co-CEOs Ted Sarandos and Greg Peters said in a statement, “We’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive.”

Netflix investors may be relieved. It would have been a costly deal, and one that faced steep regulatory hurdles. Instead, the streaming giant is set to pocket a $2.8 billion breakup fee.

The latest news came as Netflix’s Sarandos was visiting the White House in an attempt to drum up support from the Trump administration.

Paramount had tried to disrupt the Warner Bros. and Netflix merger since it was announced in December. The studio run by David Ellison went as far as launching a hostile takeover, before eventually convincing the Warner Bros. board to reopen negotiations. Paramount submitted its latest offer on Monday.

Paramount’s New Offer

Paramount’s new offer amounts to $31 a share for the entirety of Warner Bros. Netflix had previously offered $27.75 for only the studio and streaming portions of the company. Crucially, Netflix did not want to acquire Warner Bros.’ linear television channels, which include CNN, TBS and the Food Network.

Included in Paramount’s offer are a series of sweeteners meant to demonstrate its willingness to put its money where its mouth is. If the deal doesn’t close by Sept. 30, Paramount will pay Warner Bros. shareholders 25 cents a share every day — referred to as a ticking fee — until it does. If the deal is killed because of regulatory matters, Paramount will pay Warner Bros. $7 billion.

Paramount will also cover the $2.8 billion termination fee Warner Bros. would owe Netflix for backing out of their previously agreed-to deal.

In its proposal, Paramount also agreed to exclude any of Warner Bros.’ television channels from a standard M&A clause that lets a buyer renegotiate, or even back out of, a deal should the seller’s business crater unexpectedly.

Also included in the deal is a commitment from Paramount investors to cover any financial shortfalls that might arise. Specifically, Larry Ellison — father of Paramount CEO David Ellison and cofounder of Oracle (ORCL) — agreed to “contribute additional equity funding to the extent needed to support the solvency certificate required by Paramount’s lending banks,” according to the Warner Bros. statement.

Paramount-Trump Ties

Paramount is seen as having close ties to President Donald Trump. The studio has regularly touted its ability to pass regulatory muster as one of its merger offer’s strengths relative to Netflix.

The elder Ellison is a major Republican donor. He has donated to past Trump campaigns but did not do so directly in the 2024 election, according to reports. However, the younger Ellison did donate roughly $900,000 to former President Joe Biden’s reelection campaign in 2024, according to CNBC.

The Paramount-Warner Bros. deal still faces a long regulatory approval process in the U.S. and Europe. As such, both parties are trying to curry favor with President Trump.

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PSKY, WBD And NFLX Stocks

Shares of Warner Bros. fell 2% before the open, with the bidding war seemingly over.

Paramount stock jumped 5%, after surging 10% Thursday on quarterly earnings.

Netflix stock also gapped up 8%. Since the Warner-Netflix deal was announced on Dec. 5, shares are down around 20%. Netflix stock is down about 40% since hitting a high of 134.12 in June.

Both PSKY and NFLX are set to open above their long-sliding 50-day lines.

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