Ellison backed Paramount in Pole Position for $111bn Takeover for Warner Bros

Warner Bros was put up for sale last year. 

In light of Paramount's new bid, Netflix has dropped out of the bidding race citing the transaction was a "nice to have" not a "must have" at all costs. 

Rob Bonta, California Attorney General (the State's "top legal boss"), warned the transaction was "not a done deal".

Netflix updates bid to all-cash offer for Warner Bros

Netflix has offered an all cash for Warner Bros.

The aim is to push off  repeat bids from Paramount Skydance (PSKY, backed by Larry Ellison, whose son David founded Skydance, and produced Top Gun -Maverick) which have been repeatedly rebuffed.

The deal would include Warner Bros film and TV studios, HBO and HBO Max, content library and streaming operations. 

However, Warner Brothers (currently Warner Bros Discovery) would lose the Discovery brand (which includes CNN, Discovery Channel and Food Network, making it one of the largest linear TV operators in the world). Discovery would be taken public mid 2026.

Warner Bros has stuck with Netflix's bid and questioned Skydance's financing.

Netflix stock is up, Paramount down.

Netflix Acquiring Warner Bros for $82.7bn

The deal would give Netflix rights to several iconic franchises including DC Comics, Harry Potter and Lord of the Rings.

Owning the franchise means controlling the legal rights to exploit the intellectual property across different media and commercial formats such as films, TV, video games and merchandise and theme parks.

A key metric giving insight into the strategic rationale - content released in the last year make up 5% of titles on Netflix, drives 20% of viewing - showing engagement is directly correlated to content spend.

Bill Ackman's Pershing Square Stumbles on Netflix Bet

New York based Bill Ackman's Pershing Square (the company he founded in 2004 with $54m)  reversed a $1bn position in Netflix (purchased in January) after the streaming media firm announced an outflow of 200,00 subscribers (partly due to its exit from Russia) generating a 35% drop in share price.  

This exit resulted in a $400m loss for Pershing investors. 

Bill imparted the need to act quickly and pointed to Netflix's "enormous operating leverage" as the reason why future subscriber growth revisions would have an "outsized impact on (his) estimate of intrinsic value". This is not Bill's biggest lost - he had earlier lost $4bn in his stake in pharma firm, Valeant Pharmaceuticals (now renamed to Bausch Health).

In closing, Bill also expressed optimism about the "opportunity rich" environment and confidence in putting the Netflix sale proceeds to good use.

Pershing Square also has a UK closed-end fund, Pershing Square Holdings (PSH), launched in October 2014 on the London Stock Exchange, and whose legal entity is incorporated in Guernsey.