David Ellison Shouts “Rigged” at Warner Bros. After Losing Auction to Netflix for $72B

Well, I woke up sick this morning with my head pounding and my throat full of junk (I’ll spare you the rest of the gruesome details) but let’s just say I’m not exactly thriving. And yet, even in this tragic state, I can promise you I’m still having a better day than nepobaby David Ellison.

And why’s that? Because Netflix rolled up to the Warner Bros. auction and outbid whatever Daddy Ellison was willing to spend on Harry Potter and Tony Soprano.

They essentially walked up to the auctioneer, threw down $72 billion like it was store credit, and said, “We’ll take the film studio, the streaming platform, and whatever else isn't bolted to the concrete. Appreciate it.”

And just like that, the most dramatic bidding war in Hollywood history died mid-scream. Paramount Skydance? Sent to the shadow realm. Comcast? Zucked into irrelevance. David Ellison? Most likely typing up a 15 paragraph essay to his dad about why “you don’t believe in me.”

As for Netflix, their C-Suite feels like they just looted a vault. The entire Warner Bros. film studio is now theirs, HBO Max has been bagged and tossed in the backseat, and the leftover cable networks (TNT, CNN, and whatever else is still looping NCIS from 2003) are getting spun into their own business.

(Source: CNBC)

Now for the damages. Netflix is paying $27.75 a share, which pencils out to $72 billion in equity value and an $82.7 billion enterprise value. WBD shareholders get $23.25 in cash and $4.50 in Netflix stock… a nice little pat on the back on their way out. 

Meanwhile, Netflix agreed to a $5.8 billion reverse breakup fee… their way of saying, “If regulators try to blow this up, we’re still writing a monster check, so don’t worry.” And if Warner Bros. gets spooked and bolts? That’s a $2.8 billion penalty.

Then Ted Sarandos hopped on the investor call sounding exactly like my dad trying to explain to my mom why there’s suddenly a brand-new lawnmower in the garage. “I know some of you are surprised we’re doing this,” he said, doing his best to stay composed, “We’ve always been builders, not buyers… but this is a rare opportunity.”

Rare is one word. Another is: Netflix just bought Hogwarts, Middle-earth, Gotham City, and half of prestige TV in one swipe.

Harry Potter, Game of Thrones, The Sopranos, DC Comics, The Wizard of Oz… all of it now lives under the same roof as Stranger Things and Wednesday.

And speaking of Paramount… oof. This one burns. Paramount Skydance made three bids… the final being $30 a share, all cash, plus a $5 billion breakup fee. They wanted everything and they got nothing.

Of course, when WBD chose Netflix, Paramount fired off a lawyerly meltdown accusing Warner Bros. of abandoning “the semblance and reality of a fair process.” Translation: “We lost, and now we’re filing a complaint with the manager.”

The part of the story almost no one’s talking about is that Netflix may have unintentionally rescued Warner Bros. from its own self-inflicted clown show… the Discovery chaos, the Batgirl tax-write-off funeral, the cursed HBO Max -> Max rebrand, the “why is our stock down 80%?” energy that’s been haunting their offices for quite some time now.

And judging by the stock only slipping 1%, you can tell shareholders are side-eyeing the price tag… but Netflix barely buys anything, ever. So when they do, you kind of have to assume they see math the rest of us don’t.

At the time of publishing this article, Stocks.News holds positions in Netflix as mentioned in the article.