Netflix Inc. has withdrawn from the competition to acquire Warner Bros. Discovery Inc., paving the way for rival suitor Paramount Skydance Corp. to finalize its $111 billion takeover of the legendary Hollywood studio.
In a statement released Thursday, Netflix explained that while its negotiated transaction would have added shareholder value and offered a straightforward path to regulatory approval, the company chose to remain disciplined. At the price required to compete with Paramount Skydance’s latest proposal, Netflix determined the deal was no longer financially attractive and declined to match the offer.
Following the news, Netflix shares surged by as much as 13% in after-hours trading, suggesting investor relief at the company’s decision to walk away. Conversely, Warner Bros. shares dipped as the prospect of a prolonged bidding war evaporated, while Paramount shares remained steady.
The withdrawal marks a significant turn in a months-long saga. Netflix had originally reached an $82.7 billion agreement in December to acquire Warner Bros.’ studio and streaming operations. However, aggressive counteroffers from Paramount for the entire company forced a reopening of the bidding process. On Thursday, the Warner Bros. board officially deemed Paramount’s latest offer of $31 per share superior.
Netflix, a dominant force in digital entertainment, currently boasts over 325 million global subscribers and remains highly profitable. In contrast, legacy media giants like Paramount and Warner Bros. have worked to build their own streaming services but have struggled to match Netflix’s scale as their traditional cable and broadcast networks face declining viewership and ad revenue.
Paramount’s successful bid includes Warner Bros.’ extensive portfolio of cable networks, such as CNN and TNT. The takeover effort was led by David Ellison, the 43-year-old technology heir who recently merged his Skydance Media with Paramount, granting him control of CBS, MTV, and the Paramount film studio. Ellison initiated his pursuit of Warner Bros. with a private offer in September, shortly after his Skydance merger closed.
To secure the win, Paramount launched a comprehensive campaign that included a tender offer for shares and a threat of a proxy battle. Ellison also lobbied heavily in Washington, making several trips to present his case to regulators and political figures, including President Donald Trump.
The deal’s financial backing was bolstered by David’s father, Oracle Corp. Chairman Larry Ellison, who provided personal guarantees on more than $40 billion in equity. Additionally, Paramount committed to paying $2.8 billion to cover the termination fee Warner Bros. owes Netflix, as well as a $7 billion “breakup fee” should the merger fail to receive regulatory clearance.
