Netflix Withdraws from Paramount Bidding

Warner Bros. Discovery (WBD) CEO David Zaslav may have imagined landing a significant deal while watching the competition heat up between Netflix and Paramount Skydance. However, it turns out he didn’t anticipate Netflix’s swift exit from the bidding war.

After the market closed on Thursday, WBD declared its final and best offer of $31 per share for Paramount Skydance’s movie studio, streaming service, and cable network, which surpassed Netflix’s earlier accepted bid of $27.75 per share.

The clock started ticking as WBD made its announcement. Netflix had four business days to respond, but just over an hour later, they opted out.

In a joint statement, Netflix co-CEOs Ted Sarandos and Greg Peters remarked, “The transaction we negotiated was intended to create shareholder value with a clear path to regulatory approval. Yet, we’ve chosen not to match the latest bid from Paramount Skydance as it doesn’t make financial sense at this stage.” Their cautious tone suggested that they weren’t fully committed to entering a bidding war.

Earlier, during an interview on Fox Business’s “Cramman Countdown,” Sarandos hinted at a disciplined approach similar to what Warren Buffett suggests: “Never overpay for an asset, regardless of how appealing it is.”

While Netflix shareholders have been skeptical about the merger since the formal bidding process began on November 20, the company’s stock has plummeted by over 19% during that time.

Concerns revolved around whether the hefty $82.7 billion deal would jeopardize Netflix’s solid financial standing and whether regulators would approve it.

Interestingly, after WBD officially confirmed Paramount’s superior bid, Netflix stock saw a nearly 10% rise in after-hours trading, providing some relief for investors.

In their statement, Sarandos and Peters hinted at a consensus with shareholders, saying, “This deal has always been a ‘nice-to-have’ at the right price, not a ‘must-have’ at any price.”