Netflix Withdraws Offer for Warner Bros., Making Paramount the Victor

Netflix Withdraws from Warner Bros. Discovery Acquisition Battle

Netflix (NFLX) has exited the competition to acquire Warner Bros. Discovery (WBD), paving the way for Paramount Skydance (PSKY) to secure a $111 billion agreement for the iconic Hollywood studio.

In a statement released Thursday, Netflix commented, “Our proposed deal would have delivered value to shareholders and had a straightforward route to regulatory approval. However, we have always maintained financial discipline, and matching Paramount Skydance’s latest bid no longer makes sense for us, so we have chosen not to proceed.”

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WATCH: Netflix has opted not to raise its offer for Warner Bros. Discovery. Annalyse Keller of Seven Letter, Democratic Strategist Arshi Siddiqui, and Bloomberg’s Kailey Leinz discuss the implications on “Balance of Power.” Source: Bloomberg

Netflix’s stock surged by up to 13% in after-hours trading, reflecting investor approval of the company’s decision to step back. Warner Bros. shares declined as expectations of a bidding war faded, while Paramount’s stock remained steady.

Back in December, Netflix agreed to an $82.7 billion deal, including debt, to acquire Warner Bros.’ studio and streaming operations. However, Paramount’s repeated counteroffers for the entire company reignited the bidding process. On Thursday, Warner Bros. determined that Paramount’s $31-per-share proposal was superior.

Netflix, a pioneer in streaming television, has built a profitable business with over 325 million global subscribers paying monthly for its content library.

Traditional entertainment giants like Paramount and Warner Bros. have launched their own streaming platforms, but they have struggled to match the subscriber numbers of their digital-native competitors as their legacy TV networks lose viewers and advertising revenue.

Paramount’s proposal included Warner Bros.’ cable channels such as CNN and TNT. Led by David Ellison, the company began its pursuit of Warner Bros. with a private bid in September, shortly after Ellison completed the merger of Skydance Media with Paramount. This merger gave the 43-year-old control over Paramount’s film studio, streaming service, and TV networks like CBS and MTV.

Warner Bros. started seeking buyers in October and finalized a deal with Netflix in December.

After initially losing out, Paramount launched an aggressive effort to re-enter the race. The company initiated a tender offer for Warner Bros. shares and threatened a proxy battle at the next annual meeting. Paramount also lobbied regulators and political figures, including President Donald Trump, with Ellison making several trips to Washington to advocate for the deal.

Paramount’s Revised Offer and Commitments

Following multiple rejections from Warner Bros., Paramount revised its offer, including personal guarantees for over $40 billion in equity from David Ellison’s father, Larry Ellison, chairman of Oracle Corp. and one of the world’s wealthiest individuals.

Paramount also committed to providing Warner Bros. with $2.8 billion to compensate Netflix for the termination of their agreement, and pledged to pay Warner Bros. $7 billion if the deal fails to receive regulatory approval.

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