Paramount (PSKY) Stock: What the Warner Bros Takeover Means for Investors

TLDR

• Paramount Skydance has made a $111bn bid for Warner Bros Discovery, which the WBD board declared “superior” to Netflix’s offer
• Netflix walked away, saying the deal was “no longer financially attractive” at $31 a share
• Paramount’s bid covers the entire WBD business including HBO, CNN, Harry Potter and Batman franchises
• Regulatory hurdles remain, with the California AG and US/European regulators yet to approve the deal
• CBS News and WBD staff are alarmed about potential job cuts and editorial changes under Ellison ownership

Paramount Skydance has cleared a major hurdle in its bid to acquire Warner Bros Discovery after Netflix walked away from the fight, sending Paramount stock up 6% in after-hours trading.

Netflix confirmed Thursday it would not match Paramount’s $31-a-share offer after WBD’s board declared it “superior.” Netflix co-CEOs Ted Sarandos and Greg Peters said the price made the deal “no longer financially attractive.”

The decision ends months of back-and-forth bidding that began when Paramount first approached WBD in September.

Paramount Skydance Corporation Class B Common Stock, PSKY

Paramount’s $111bn offer covers the full WBD business — HBO, CNN, Harry Potter, Batman, and more. Netflix’s original $83bn deal, struck in December, only covered WBD’s studio and streaming assets.

The Ellisons, who combined Skydance and Paramount last year, would gain control of CBS News, 60 Minutes, and CNN under the proposed merger.

Netflix stock jumped 8.5% in post-market trading. Investors appeared relieved the streamer walked away from a deal that carried heavy antitrust risk.

Regulatory Road Ahead

The deal is far from done. It needs sign-off from the US Department of Justice and European regulators.

Paramount sweetened its offer by $1 per share compared to its December bid, added a $0.25-per-share quarterly fee if the deal doesn’t close after September, and offered a $7bn break fee if regulators block it.

Paramount also agreed to cover the $2.8bn termination fee WBD owes Netflix if it exits the original agreement.

Staff Concerns

Employees at CBS News and WBD reacted with alarm to the news. Workers fear merging two major newsrooms will lead to job cuts as overlapping roles are eliminated.

Some staff expressed concern about Bari Weiss, appointed CBS News editor-in-chief last October, potentially taking a bigger role. Weiss has no prior television experience and her tenure has been described as uneven.

Seth Stern of the Freedom of the Press Foundation was sharply critical, warning that Ellison would prioritize corporate interests over press freedom.

Politics has also played a role. Trump, a Larry Ellison supporter, weighed in on the bidding multiple times. David Ellison attended Trump’s State of the Union address Tuesday as a guest of Senator Lindsey Graham.

WBD is scheduled to hold a global town hall for employees Friday morning. In a memo Thursday, CNN chief Mark Thompson urged staff not to jump to conclusions.

Paramount stock was up 6% in after-hours trading at the time of the announcement.

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