It's looking more and more like Netflix will be the ultimate victor in the battle for Warner Bros. Discovery. In early December, the streaming giant won the bidding war for the David Zaslav-led studio. However, uncertainty surrounded the deal between the two companies when David Ellison's Paramount Skydance submitted a hostile bid of $30 per share for WBD. The offer was the same one proposed by Paramount during the second round of offers for the Hollywood company.
The WBD board of directors ultimately rejected the offer, and urged shareholders to do the same. Netflix purchasing Warner Bros. Discovery is, perhaps, one of the most unexpected turn of events in Hollywood in its decades-long history. This, particularly due to the fact that, at the start of the sale process, Paramount Skydance appeared to be the strongest contender. Now, it's been revealed how the streaming giant pulled ahead in the race.
The Hollywood Reporter has stated that, on December 4, in the lead-up to Warner Bros. Discovery reaching a decision for its second round of bids, Netflix co-CEO Ted Sarandos called David Zaslav to give him an ultimatum: Either Netflix's offer was accepted that same day, or the company would walk away from the bidding war. This phone call was paired with an email from the streamer's legal counsel—Skadden, Arps, Slate, Meagher & Flom—sent to WBD's legal representatives at Debevoise & Plimpton.
The email echoed Sarandos' sentiment to Zaslav, making it clear its bid was Netflix's best and final: "Our client's expectation is that we will be signed as soon as practicable this evening, and the deal announced before open of market tomorrow morning. We have been instructed by our client to convey that this is our best and final proposal and that if we are not done before open of market tomorrow morning, our proposal shall be deemed withdrawn, null and void. We will withdraw from your process, abandon pursuit of the transaction and terminate discussions."
According to THR, hours after these communications, Netflix's offer for Warner Bros. Discovery was approved.
Though the merger still requires government approval, it appears that neither Netflix co-CEOs Ted Sarandos & Greg Peters, nor Warner Bros. Discovery CEO David Zaslav are worried about the deal being rejected. After WBD's board of directors formally turned down Paramount's offer, Sarandos and Peters were given a tour of the Warner Bros. Studio lot by David Zaslav. Official pictures from the meet-up were also shared by THR. Per the trade, this was a show of confidence in the merger.
Zaslav and WBD's board of directors appear to be heavily interested in the deal going through. Upon announcing its formal rejection of Paramount's bid, WBD's board of directors stated the David Ellison-led company had misled investors regarding the benefits of its offer. In a filing (via THR), Warner Bros. Discovery further explained why it favored Netflix over other bidders:
"Given that, among other things, Netflix submitted the meaningfully highest bid of the December 1 Bids accompanied by the most readily actionable legal documentation, with few issues remaining to be resolved, the WBD Board unanimously decided to accelerate discussions with Netflix in order to resolve remaining issues in Netflix's merger agreement markup and other transaction agreements. At the same time, the WBD Board instructed WBD's management and advisors to remain engaged with Company A [Comcast] and PSKY [Paramount Skydance], and provide them feedback consistent with the WBD Board's discussions regarding the deficiencies in their proposals."
It remains to be seen whether David Ellison delivers another offer for the studio, but as of now, things are lookig positive for Netflix's merger with Warner Bros. Discovery.