Netflix has withdrawn from its bid to acquire Warner Bros. Discovery’s (WBD) studio and streaming assets, effectively clearing the path for Paramount Global, backed by Skydance Media, to proceed with a takeover. The decision came after WBD deemed Paramount’s revised offer “superior” to Netflix’s, a development announced Thursday and confirmed by Netflix Friday evening.
In a statement, Netflix co-CEOs Ted Sarandos and Greg Peters stated that while the proposed transaction “would have created shareholder value with a clear path to regulatory approval,” the price required to match Paramount Skydance’s latest offer rendered the deal “no longer financially attractive.” They added that the acquisition was a “nice to have” rather than a “must have” for the streaming giant.
Paramount’s renewed offer includes an all-cash price of $31 per share, according to Warner Bros. Discovery, and also accounts for the $2.8 billion termination fee WBD will owe Netflix for ending their existing agreement. The deal is further supported by Larry Ellison, executive chair and founder of Oracle, and father of Skydance Media’s David Ellison, who acquired Paramount last year.
Warner Bros. Discovery CEO David Zaslav emphasized during a Thursday earnings call that any deal would prioritize maximizing value and minimizing risk, describing the sales process as “rigorously highly competitive.” The WBD board consulted with independent financial and legal advisors before determining Paramount’s proposal was superior.
Netflix’s initial bid, revised in January, was an all-cash offer of $72 billion, or $27.75 per WBD share. However, analysts had questioned whether either company would continue to increase their bids given the financial strain of a protracted bidding war. According to Emarketer senior analyst Ross Benes, investors were unlikely to support further increases. “If Netflix pulled out of the WBD sweepstakes, it’d leave rival Paramount to swallow a bigger tab than it originally planned,” Benes said.
The potential acquisition of WBD by Netflix also carried a sentimental element, Benes noted. “Netflix executives have always spoken of HBO fondly, hoping to grow HBO before HBO became Netflix. There’s a sentimental angle to this deal in Netflix being able to own HBO themselves.”
The Paramount Skydance acquisition would encompass the entirety of Warner Bros. Discovery, including its studios, HBO, streaming service, games and entertainment divisions, and linear television networks such as CNN, TBS, TNT, Discovery, and HGTV. David Ellison has reportedly warned of significant job cuts following the acquisition, according to reports.
Netflix’s stock rose approximately 10% following the announcement that it would not pursue a higher bid. The company stated it will resume its share repurchase program and continue to invest approximately $20 billion in content this year.
Warner Bros. Discovery will now continue negotiations with Paramount Skydance, pending regulatory approval. Netflix has four business days to potentially counter Paramount’s offer, as stipulated in their original agreement with WBD, though the company has indicated it will not do so.
