'Netflix dodged more than a bullet,' says Ronnie Screwvala as Warner Bros deal falls through

Ronnie Screwvala, co-founder of upGrad and founder of UTV, shared his two cents on Netflix walking out of the Warner Bros deal. In a post on X, Screwvala said that Netflix dodged "more than a bullet" by walking out of the deal. 

"Well, Netflix dodged more than a bullet - more like a Bazooka - always admired Reed Hastings and all Netflix for their incredible FOCUS while scaling and keeping creativity and innovation at the core - and glad to see it can go back to what it does incredibly well - am sure no regrets today or long term in walking away," Screwvala wrote in his post. 

Screwvala's post came as Paramount Skydance has emerged as the frontrunner to acquire Warner Bros Discovery after Netflix decided not to match Paramount Skydance’s latest offer, citing financial discipline. Paramount increased the termination fee payable if the deal fails regulatory approval to $7 billion and agreed to cover the $2.8 billion breakup fee Warner Bros would owe Netflix. 

The Ellison Trust has committed $45.7 billion in equity financing, with support from Larry Ellison. Debt financing of $57.5 billion will be provided by Bank of America Merrill Lynch, Citi and Apollo.

Netflix officially confirmed its exit, stating, “We’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive.”

A Netflix adviser told Reuters the company chose to exit because the economics no longer made sense. Co-CEO Ted Sarandos had previously signalled restraint in raising the bid, stressing a disciplined approach to acquisitions. The adviser added Netflix was effectively bidding against billionaire Larry Ellison, who appeared willing to pay a price Netflix considered excessive.

The decision marks a significant development in the ongoing battle for control of Warner Bros, with Paramount Skydance now moving ahead pending board and regulatory approval. Analysts from TD Cowen believe federal approval is likely, though challenges from California and possible European reviews remain.

California Attorney General Rob Bonta confirmed that the state’s Department of Justice is actively investigating the deal. Democratic Senators Elizabeth Warren, Bernie Sanders and Richard Blumenthal have also raised concerns about potential political influence in the approval process.

Investor Ancora Holdings, which holds a small stake in Warner Bros, welcomed Netflix’s withdrawal, stating it improves the likelihood of regulatory approval and increases potential cash returns to shareholders.

Warner Bros’ board must still formally terminate its agreement with Netflix and approve the new Paramount Skydance proposal. Chief Executive David Zaslav said adopting the Paramount merger agreement would create significant shareholder value and expressed optimism about the combined company’s prospects.

A merger between Paramount and Warner Bros would unite two major film studios, streaming platforms HBO Max and Paramount+, and news operations including CNN and CBS. Netflix shares surged more than 10% following the announcement of its withdrawal.