Paramount on course to win Warner Bros takeover tussle as Netflix withdraws

Paramount Skydance looks set to emerge as the winner of the intense bidding battle for Warner Bros Discovery after rival suitor Netflix said it would not raise its takeover offer.

Streaming giant Netflix said in a statement overnight in the US that the price required to top Paramount’s 111 billion US dollar (£82.2 billion) sweetened bid for Warner Bros would make it a deal that is “no longer financially attractive”.

The Warner Bros board has yet to give its full backing to the Paramount bid, as it still continues to recommend the offer by Netflix, but it declared late on Thursday that the sweetened 31 dollars-a-share bid from Paramount lodged earlier this week was “superior”.

It effectively paves the way for Paramount to win the takeover tussle, which has run for months, since it first put itself up for sale last year.

Unlike Netflix, Paramount wants to buy all of Warner Bros’ operations, including networks such as CNN and Discovery, as well as HBO Max, DC Studios and popular titles such as Harry Potter.

It would see them added to Paramount’s CBS and combine two of Hollywood’s last five remaining studios.

A Paramount buyout of Warner’s business would significantly reshape Hollywood and the wider media landscape.

Warner Bros films such as Superman, Barbie, and One Battle After Another, as well as hit TV series such as The White Lotus and Succession, would join Paramount’s extensive library, including the Mission: Impossible and Star Trek franchises.

But there have been worries raised by legislators and industry trade groups that yet more consolidation in the sector would concentrate power further in the hands of a small number of players.

Philippa Childs, head of UK entertainment trade union Bectu, said: “Continuing consolidation within the creative industries is worrying for anyone who values competition and a plurality of voices and stories in entertainment and the media.

“I am concerned that the takeover will have a negative impact on jobs and add to uncertainty in what is already an incredibly precarious sector to work in.”

Paramount, whose approach was initially hostile, has argued the merger would be good for the industry and consumers, though it will need to pass stringent competition tests by regulators in the US and Europe.

Netflix had originally agreed to buy Warner Bros’s studio and streaming business last December in a deal worth roughly 82 billion dollars (£61 billion) including debt.

Co-chief executives Ted Sarandos and Greg Peters said after Paramount’s latest bid: “The transaction we negotiated would have created shareholder value with a clear path to regulatory approval.

“However, 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.”

They added: “We believe we would have been strong stewards of Warner Bros’ iconic brands.

“But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”

Dan Coatsworth, head of markets at AJ Bell, said Paramount’s apparent victory “might be good news for people with a Netflix subscription”.

He said: “Should it have bought Warner Bros, there was a real chance that Netflix charged customers a lot more to help pay for the deal by justifying the price hikes on providing richer content.”

Technology expert Ben Barringer at Quilter Cheviot said Netflix’s move to walk away was “a good outcome for everyone”.

“Netflix arguably didn’t need this deal so it is good to see it can now focus on doing what it does best – content creation, user engagement and pricing,” he said.

He added that Paramount can now compete better with Disney, but has “saddled itself with a lot of debt” as part of the deal.