In December of last year, Warner Bros. agreed to sell part of its assets to Netflix as part of a deal worth about $82 billion, including debt. However, Paramount soon made a competing offer, which was initially rejected, but this week increased it by $1 per share.
Netflix's management commented that the deal with Paramount no longer seems financially attractive. "We have always been disciplined in our decisions," noted Netflix co-CEOs Ted Sarandos and Greg Peters.
The potential buyer will be able to control not only Warner Bros. but also its films and media assets, which could radically change the media landscape.
According to California Attorney General Rob Bonta, the possible merger of Paramount and Warner Bros. "is not yet decided." He reported on an investigation being conducted by the California Department of Justice, which will be closely scrutinized.
In addition to local approvals, Paramount will also need consent from the U.S. Department of Justice and European regulators. The deal could significantly impact the future of CNN, which is part of Warner Bros.
During the negotiations, Paramount is supported by tech magnate Larry Ellison, and the company is led by his son David. Interest in the deal has also been fueled by connections to Donald Trump, who has repeatedly criticized CNN.
CNN head Mark Thompson urged employees not to rush to conclusions about the company's future when news of the deal with Paramount emerged. His warning came immediately after the news of the deal became known.
It is also worth noting that Paramount's initial offer received support from Trump's son-in-law, Jared Kushner, through his investment company, raising additional concerns about political influence on the deal. Kushner withdrew from negotiations earlier this month.
If the deal is approved, Paramount will be able to expand its portfolio, including the streaming service HBO Max, as well as channels like CNN and Food Network. In turn, Paramount already owns brands such as Nickelodeon and CBS.
The competition for the acquisition of Warner Bros. has been interpreted as a struggle between Netflix and Paramount, where neither side can be declared a clear winner. Critics note that a possible merger of Paramount and Warner Bros. could have negative consequences for the film industry and lead to job cuts in Hollywood.
Ultimately, the conclusion of a deal between Paramount and Warner Bros. could have a significant impact on the entire media sector, including CNN, and become an important event that changes the face of Hollywood.
In the latest offer, Paramount indicated a price of $31 per share, exceeding the previous price of $30. The company also agreed to pay $7 billion in case the deal falls through and cover $2.8 billion that Warner Bros. was supposed to pay Netflix.
