AceShowbiz - David Zaslav, CEO of Warner Bros. Discovery, has officially shifted course after recent negotiations with Netflix, signaling a new partnership focus on Paramount. Just a week ago, Warner Bros. Discovery had a deal agreed upon with Netflix, but that arrangement has now been set aside.

In a public statement, Zaslav expressed respect for Netflix, saying, "Netflix is a great company and throughout this process Ted, Greg, Spence and everyone there have been extraordinary partners to us. We wish them well in the future." However, the company is now pursuing what it describes as a "superior offer" from Paramount, which Netflix declined to match.

Once the Warner Bros. Discovery board approves the merger with Paramount, Zaslav anticipates significant gains for shareholders. He added, "We are excited about the potential of a combined Paramount Skydance and Warner Bros. Discovery and can't wait to get started working together telling the stories that move the world."

Netflix’s leadership, including co-CEOs Ted Sarandos and Greg Peters, along with CFO Spencer Neumann, had been involved in the discussions. Despite Netflix’s initial engagement, the streaming giant chose not to submit a counteroffer within the four business days they had to respond, effectively stepping aside.

Samuel A. Di Piazza, Jr., chair of the Warner Bros. Discovery board, praised the extensive evaluation process, stating he is "extremely proud of the rigorous process this Board has run over the past five and a half months that has led us to the cusp of combining these two storied companies and the excitement it will bring to audiences for many years to come."

The backdrop to this development involves a December 5 agreement where WBD had agreed to sell its streaming and studio assets to Netflix for $27.75 per share in cash. Paramount’s CEO, David Ellison, had been making offers for the entire company, which were initially declined. The latest bid from Paramount included enhancements that convinced WBD it was worth further consideration.

Netflix’s decision not to counter has some silver linings for the company. Its stock price rose, reflecting investor preference for Netflix’s existing streamlined business rather than a complex merger. Additionally, Netflix will receive a $2.8 billion breakup fee from Warner Bros. Discovery, funded by Paramount.

This sequence of events has also pressured a competing studio to increase its cash offer, setting the stage for what is poised to become the largest leveraged buyout in history.