Netflix / Warner Bros.
A short note on yesterday's news
Yesterday afternoon, following a $31 per share “superior proposal” from Paramount Skydance, Netflix walked away from the Warner Bros. deal. I won’t rehash what I wrote in “A Rare Opportunity” and “Waning Optimism”, but I want to commend Netflix management for their resolve. They had previously communicated to WBD that the agreed-to deal terms represented their “best and final proposal”, but animal spirits can sway actions in a bidding war, particularly for the bidder who has the clearest financial rationale for stretching to a higher price tag (Netflix). Thankfully, management resisted the temptation to pay even more. The company can now go back to the drawing board, and will receive a $2.8 billion termination fee as a consolation prize.