Warner Bros kicked off the public auction in October, after Paramount submitted the first of three escalating offers for the media company in September. Sources familiar with the offer said Paramount aimed to pre-empt the planned separation because the split would undercut its ability to combine the traditional television networks' businesses and increase the risk of being outbid for the studio by the likes of Netflix.
Around that time, banker JPMorgan Chase & Co was advising Warner Bros Discovery CEO David Zaslav to consider reversing the order of the planned spin, shedding the Discovery Global unit comprising the company's cable television assets first. This would give the company more flexibility, including the option to sell the studio, streaming and content assets, which advisers believed would draw strong interest, according to sources familiar with the matter.
Executives for the streaming service and its advisory team, which included the investment banks Moelis & Company, Wells Fargo and the law firm Skadden, Arps, Slate, Meagher & Flom, had been holding daily morning calls for the past two months, sources said. The group worked throughout Thanksgiving week - including multiple calls on Thanksgiving Day - to prepare a bid by the Dec 1 deadline.
Warner Bros' board similarly convened every day for the last eight days leading up to the decision on Thursday, when Netflix presented the final offer that sources described as the only offer they considered binding and complete, sources familiar with the deliberations said.
The board favoured Netflix's deal, which would yield more immediate benefits over one by Comcast. The NBCUniversal parent proposed merging its entertainment division with Warner Bros Discovery, creating a much larger unit that would rival Walt Disney. But it would have taken years to execute, the sources said.
Comcast declined to comment.
Although Paramount raised its offer to US$30 per share on Thursday for the entire company, for an equity value of US$78 billion, according to sources familiar with the deal, the Warner Bros board had concerns about the financing, other sources said.
Paramount declined comment.
To reassure the seller over what is expected to be a significant regulatory review, Netflix put forward one of the largest breakup fees in M&A history of US$5.8 billion, a sign of its belief it would win regulatory approval, the sources said. "No one lights US$6 billion on fire without that conviction," one of the sources said.
Until the moment late on Thursday night when Netflix learned its offer had been accepted - news that was greeted by clapping and cheering on a group call - one Netflix executive confided that they thought they had only a 50-50 chance.
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