Netflix’s (NASDAQ:NFLX) decision to drop its bid for Warner Bros. Discovery may have been more politically motivated than originally thought, according to media mogul John Malone.
Malone Says Trump Administration Wouldn’t Approve Netflix Deal
The recently approved merger between Paramount Skydance (NYSE:SKYD) and Warner Bros. Discovery may not have happened if not for interference from the Trump Administration.
Media mogul John Malone, who is also a former shareholder in Warner Bros. Discovery said Netflix was told that their acquisition would be blocked.
"They were right on the verge of pressing on, and were told by the administration that they had no chance of getting regulatory approval from the U.S. I think that was really the spike that got ‘em," Malone said at the Paley Center for Media’s International Council Summit Wednesday, as reported by Deadline.
Malone alleges that after this was made clear, Netflix dropped out of the bidding and made way for Paramount to be the winning bidder. Netflix co-CEO Ted Sarandos previously went to the White House to meet with the Trump administration in February before the company ended its bid. The Netflix CEO previously said President Donald Trump was "completely neutral" on the proposed merger. Sarandos said Netflix dropped out of the bidding process due to Paramount’s offer being better.
Benzinga reached out to Netflix for comment.
"There was mixed opinion among us (about Netflix dropping out) on the Warner Bros. Discovery side. We would have seen, and would liked to have seen, the different outcome."
Malone called the final offer from Paramount for WBD shareholders "more than sufficient."
Politics Clouded Deal from Start
The latest comments from Malone come after the merger has been completed, but may add to the dark cloud hanging over the new company and allegations that politics were too big of a part of the deal.
The Justice Department approved the merger, while some state attorney generals challenged the merger before reaching a settlement earlier this year.
As news of Warner Bros. Discovery coming up for bid, the Trump administration may have made clear its preference from the start.
“Who owns Warner Bros. Discovery is every important to the administration,” a senior Trump administration official told the New York Post. “The Warner board needs to think very seriously not just on the price competition but which player in the suitor pool has been successful getting a deal done.”
While most investors can read between the lines and realize that this would likely mean Paramount Skydance, given their recent merger approved by the Trump administration, the senior official actually spells it out.
“And that points to the Ellisons,” the senior administration official said, referring to Paramount Skydance CEO David Ellison and his father, Oracle co-founder and longtime Trump ally Larry Ellison.
“Warner really needs to think really hard about the odds of success getting the deal cleared with players outside of Paramount Skydance.”
Those comments appear to come in line with what Malone said. Any bidders outside of Paramount Skydance were told that they would not get the deal approved.
The merger also faced several lawsuits including one from Paramount Skydance shareholder Paul Robbins, who alleged a side deal between Trump and the Ellisons to get the deal approved.
Trump offered his praise for the deal once completed.
“I’m happy about that. That’s great,” Trump told reporters at the White House, as reported by Variety.
For a merger that upset members of Congress and attorneys general over the president’s relationship with the deal’s major backers, this may not be the glowing review Chairman and CEO David Ellison is hoping for.
“It’s gonna be a great company. They’re terrific people, and it’s gonna be a great company. That’s a great merger. I’m glad they let it go,” Trump added.
Malone’s comments are likely too late to draw more legal attention or challenges. They also come with shares of Paramount Skydance down 22.7% over the last month.
Shares now trade at $7.81 versus their opening price of $9.77 on Oct. 6 under the new ticker and move to the New York Stock Exchange from the Nasdaq.
An image that combines the logos of Paramount Skydance, Netflix and Warner Bros. Discovery | Photo courtesy: Shutterstock
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