Paramount snatches away Warner Bros. from Netflix
CBS owner outbids tech streamer
Editor’s Note: This article was updated on February 27.
In 1985, CNN owner Ted Turner made a hostile takeover bid to buy CBS, but the bid failed after Larry Tisch increased his ownership stake in the company, preventing CBS News and CNN from uniting.
41 years later, the two will finally get together – thanks to a hostile takeover bid made by CBS’ parent company.
In a historic move, Paramount’s hostile takeover of Warner Bros. Discovery succeeded after Netflix declined to match Paramount’s $ 31-per-share bid, and WBD shareholders deemed the offer “superior”. It’s the first time a hostile takeover has been successful involving a media company, and it paves the way for Paramount to buy its longtime rival.
The deal was officially announced Friday.
The Paramount-Warner union means a huge number of brands under one roof – CBS, TBS, CNN, Discovery, Nickelodeon, and many more. The merger also means it will be home to one of the largest television libraries on earth, with more than 100,000 hours of programming, ranging from Gunsmoke to The Big Bang Theory, and a movie library from Casablanca to Top Gun.
Paramount will also have the biggest animation library outside of Disney, including iconic characters such as Scooby-Doo, SpongeBob, Rugrats, Bugs Bunny, Mighty Mouse, and the classic Hanna-Barbera and Looney Tunes libraries.
In sports, CBS Sports will hook up with TNT Sports, creating an entity that could rival Disney’s ESPN. CBS and TNT share rights to the NCAA Basketball Tournament. TNT has been beefing up its sports rights over the last year after losing NBA rights, by adding NASCAR, Big 12 and Mountain West college sports, and the women’s pro basketball league Unrivaled. CBS has a 24/7 FAST sports news channel, CBS Sports HQ.
The merger also means streamers HBO Max and Paramount Plus will be under the same roof. Paramount head David Ellison has stated he wanted to kill HBO Max – eliminating a fierce competitor, as Paramount Plus has lagged behind its rival and others in total subs. A combined Warner and Paramount would together now have a 25 percent stake in The CW, as they had a 50-50 stake as separate companies before Nexstar bought 75 percent of the network.
But more importantly, Paramount – under the ownership of David Ellison, will take over CNN. Under Ellison, CBS News has taken a more rightward turn, with new editor-in-chief Bari Weiss likely to take the reins at CNN as well. Ellison’s Skydance bought Paramount just last year and has ties with President Donald Trump – and it’s those ties that may have pushed Paramount over the top. The deal still needs regulatory approval in the U.S. and abroad, as well as approval from the Warner Bros. Discovery board, and could close by the end of this summer.
Earlier this week, eleven GOP state attorneys general urged the Justice Department to scrutinize the Netflix-Warner Bros deal, citing concerns about its market power. But conservatives were also against the deal because of Netflix’s ties to the Obamas and a perception that the streamer pushes left-wing programming. Trump also favored Paramount given his relationship with Ellison and his father, Oracle founder Larry Ellison. With all these factors in mind, Netflix would have had a tougher road to getting this deal approved than Paramount would have (despite what Netflix said in the statement below), despite having more properties.
In a statement, Netflix conceded.
“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.”
“Netflix is a great company and throughout this process Ted, Greg, Spence and everyone there have been extraordinary partners to us. We wish them well in the future,” WBD CEO David Zaslav said in a statement. “Once our Board votes to adopt the Paramount merger agreement, it will create tremendous value for our shareholders. We are excited about the potential of a combined Paramount Skydance and Warner Bros. Discovery and can’t wait to get started working together telling the stories that move the world.”
Paramount will pay Netflix’s $2.8 billion termination fee for the failed merger, plus a $7 billion regulatory termination fee if the merger falls through. Paramount raised its offer to buy Warner to $31 per share for the entire company, triggering a clause stating Netflix had to match the offer within four days. If the Netflix deal had gone forward, they would have bought Warner Bros.’ film and TV properties and HBO/HBO Max, while spinning off the cable networks into a separate company, Discovery Global Networks. But given Versant’s floundering Wall Street performance so far after its spinoff from NBCUniversal, the spinoff would not have paid any dividends.
In extended trading on Thursday, Netflix stock rose 10 percent, while Paramount stock gained 5 percent. WBD’s stock slid by 2 percent.
Merged in 2022, Warner Bros. Discovery has struggled under CEO David Zaslav and announced last year that it would split the company into two. WBD announced it was for sale and struck a deal with Netflix, but Paramount launched a hostile takeover bid for the entire company, believing it would be a better value for shareholders.
With Paramount now buying the entire company, it would have massive leverage over cable, satellite, and streaming providers such as YouTube TV and Fubo, which could raise rates for consumers, since it owns CBS and its owned stations, and tons of mostly obsolete cable channels.
This is the second major media merger in recent months. Earlier, Nexstar announced it was buying Tegna for $6.8 billion, creating a 250-plus station group covering 80 percent of the country. Layoffs took place this week at Nexstar stations in large markets, with nine on-air anchors and reporters being let go at WGN-TV in Chicago. If anything, there will be layoffs with this Paramount-Warner merger, perhaps in the thousands – and this is on top of earlier layoffs Paramount made when they merged with Skydance.
In the meantime, it will be business as usual. Recently, Warner Bros. announced renewals with Fox Television Stations for syndicated programs The Jennifer Hudson Show for a fifth season and Extra for a 33rd, taking each through September 2027, as the Paramount-WBD merger should be complete by then.