Why Netflix ultimately abandoned the Warner acquisition

While the scenario seemed predetermined, the saga surrounding the acquisition of Warner Bros. Discovery (WBD) has finally taken an unexpected turn. Considered the favorite to acquire the historic studio, Netflix has decided not to outbid its competitor's increased offer.

A decision that impacts the entire media industry and confirms the growing tensions surrounding sector consolidation…

Paramount Skydance opens its checkbook to Netflix

Since December, Netflix had been negotiating the acquisition of a significant portion of WBD's operations, with a proposal estimated at $82 to $83 billion. The goal was to strengthen its foothold in Hollywood by acquiring Warner Bros. studios. and the HBO network, while leaving out certain linear channels.

However, Paramount Skydance changed the game with an offer of $31 per share. As reported in The Hollywood Reporter, valuing the entire group at approximately $110 billion including debt, the WBD board of directors deemed this proposal "superior".

For its part, Netflix had four days to respond. Co-CEOs Ted Sarandos and Greg Peters have finally made their decision, and there will be no bidding war. According to them, the deal was a "great opportunity" at the right price, but didn't justify matching the offer at any cost. A deliberate pure-player strategy: Netflix's withdrawal was well received by the markets, with the group's stock jumping by around 10%, as investors feared massive debt or an overvaluation of WBD's assets. By withdrawing, Netflix confirms its positioning as a platform focused on organic growth, such as content production, video game development, and the expansion of advertising. The group also avoids a potentially complex antitrust review in the United States and Europe, as we are currently seeing with Google.

For Paramount Skydance, the gamble is bolder. Backed by Larry Ellison, founder of Oracle, the company will absorb a group nearly six times its own market capitalization. It promises $6 billion in synergies, but will have to contend with high debt, a declining linear television market, and increased regulatory scrutiny.

Finally, this turnaround marks a turning point for Hollywood, as the emergence of a group combining Paramount and Warner Bros. studios, as well as HBO Max, is reshaping a media landscape already dominated by a few giants like Disney and Amazon.