Netflix Declines to Raise Offer in Warner Bros. Discovery Bidding War

In an ongoing contest for control over Warner Bros. Discovery, Netflix has announced it will not increase its acquisition bid, choosing not to match the latest proposal made by Paramount Global. According to statements from Netflix's leadership, the financial terms offered by Paramount have rendered further negotiations unattractive from a business standpoint.

Previously, Warner Bros. Discovery formally recognized Paramount's revised bid as superior. However, the company's board of directors has maintained its stance, continuing to recommend acceptance of Netflix's original offer to its shareholders. The decision regarding which proposal to accept will be determined through a shareholder vote set for March 20. As it stands, the agreement between Warner Bros. Discovery and Netflix remains valid until then.

Paramount's updated proposal, submitted earlier this week, increases its offer to $31 per share in cash for the entirety of Warner Bros. Discovery. This represents a modest rise from its prior offer and includes a provision for a $7 billion payment should the deal be blocked by regulatory authorities. In contrast, Netflix's offer is targeted solely at the studio and streaming operations of Warner Bros. Discovery, proposing to spin off the company's television networks--including the prominent news channel CNN--into a separate entity. Paramount, meanwhile, seeks to acquire the entire business, including all studios and networks.

Market reactions to these developments have been relatively muted, with Warner Bros. Discovery and Paramount shares both rising by approximately one percent in after-hours trading, while Netflix experienced a minor increase of half a percent.

The bidding rivalry began in December when Warner Bros. Discovery and Netflix reached a binding agreement for the acquisition of the studio and streaming divisions, with Netflix offering close to $83 billion. Paramount then approached Warner Bros. Discovery shareholders directly, presenting a comprehensive takeover bid valued at $108.4 billion, encompassing all divisions of the company, including its networks such as CNN.

During the negotiation process, Paramount has taken steps to address Warner Bros. Discovery's concerns and re-engage in discussions. One measure includes Paramount's commitment to cover a $2.8 billion break-up fee that Warner Bros. Discovery would owe Netflix if the existing agreement is terminated in favor of Paramount's proposal.

Beyond the financial implications, the fate of CNN has emerged as a significant factor in the negotiations. Questions regarding the continued editorial independence of CNN have been raised, especially given the network's history of critical coverage of former U.S. President Donald Trump. Following its acquisition by the Ellison family in the previous year, Paramount has faced scrutiny over its approach to news coverage, particularly regarding perceptions of a friendlier tone toward the Trump administration on its CBS network. Critics in the United States have expressed concern that CNN could experience a loss of editorial autonomy if it becomes part of Paramount's portfolio.

As the shareholder vote approaches, market observers and industry analysts will be closely monitoring developments. The outcome will not only determine the future ownership structure of Warner Bros. Discovery but could also shape the competitive dynamics of the global media and entertainment sector for years to come.