Netflix CEO Ted Sarandos failed Thursday to convince a skeptical Trump administration to approve his proposed takeover of Warner Bros. Discovery – and with that, his nearly done deal to buy WBD’s streaming service and studio went into a death spiral.
Late Thursday, WBD deemed a revised bid of $31 a share from rival Paramount Skydance a “reasonably superior offer,” forcing Netflix to pull its bid thus ending a six-month takeover battle that has captivated Wall Street and the media business.
The backdrop of the announcement was the increasingly insurmountable regulatory hurdles Netflix faced in dealing with the Trump administration. As first reported by The Post, earlier Thursday, Sarandos sat with a skeptical Attorney General Pam Bondi, White House chief of staff Susie Wiles and Justice Department antitrust officials to try to convince the administration not to oppose the deal on antitrust grounds.
He argued that combining Netflix’s No. 1 streaming service with WBD’s No. 3 largest streamer wouldn’t constitute a streaming monopoly.
Sarandos was said to have sought a meeting with President Trump, his second one since the bidding war for WBG began and the president’s absence may have foreshadowed his tenuous position with the administration. Sources tell The Post that the White House was unmoved by Sarandos’ arguments, that competition from social media negates their antitrust concerns, and that the administration would oppose the deal. That left the Netflix chief with a choice: he could litigate a decision by the DOJ antitrust division – a two-year process with an uncertain outcome – or he could walk.
Late Thursday, he chose the latter.
“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,” Sarandos and and co-CEO Greg Peters said in a statement. “This transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
“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,” said David Zaslav, president and CEO of Warner Bros. Discovery. “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.”
Netflix’s pullout – first reported by The Post in an X posting – is also a huge victory for Paramount Skydance as it attempts to build a media and programming empire with its existing media properties, including a studio, a streaming service and the CBS news and entertainment divisions.
The head of its news division, former opinion journalist Bari Weiss, will now likely control a combined news division that includes WBD’s cable news network CNN.
People at Paramount and Redbird will begin the onerous process of combining all their operations as soon as Friday, when they and WBD are expected to make an announcement on the future of the company.
The war for the future of David Zaslav-run WBD has captivated Wall Street, Washington and the media business for the past six months given the culturally important properties at stake and the boldfaced names involved in the negotiations. Warner Bros. is the home of the Warner studio, HBO Max and cable properties like CNN, TNT and Discovery. Players in the mix included the people who run Paramount Skydance, known as PSKY – indie producer David Ellision, backed by by father, the mega billionaire Oracle co-founder Larry Ellison, and their partners at RedBird Capital, run by media deal specialist Gerry Cardinale.
The bidding war became contentious at times. PSKY sued to block WBD’s initial decision to accept the Netflix bid, claiming that the board ignored its superior offer because of the friendship between Zaslav and Sarandos. Paramount later launched a “hostile” bid directly appealing to shareholders that its then $30 a share offering for the entire company was superior to the $27.75 per share bid Netflix offered on top of an uncertain valuation for a spinout of WBD’s cable properties that it didn’t want.
The Netflix-WBD marriage was seen barreling to a March 20 shareholder vote when the tide began to turn in PSKY’s favor. Investors like Mario Gabelli, a longtime WBD shareholder, began to question Netflix’s value proposition; the way the deal was structured, a planned cable-property spin out would have been loaded with billions of dollars of debt. That meant its value might be less than $1 a share, making PSKY’s offer too good to pass up.
Netflix investors also began to worry that the company was entering uncharted territory since most of its growth has come organically – without the need of bid deals, the regulatory scrutiny it brings and the mountains of debt needed to pay for its $73 billion offering. Netflix market value sank around $200 billion since it was rumored to be bidding on WBD.
Then came increased pushback from the Trump administration and Republicans in congress, and not only on antitrust grounds. Conservative lawmakers believe Netflix’s entertainment offerings skew to the left, and they aren’t looking to give it more market power.
Susan Rice, the partisan Democrat and former Obama national security chief who is a Netflix board member, appeared to confirm their worst suspicions. She recently appeared on a podcast in which she ripped Trump and warned that corporations that “take a knee” to his administration should expect to be “held accountable” if Dems return to power.
In response, the president demanded that Sarandos either fire Rice or “pay the consequences.”
