Netflix Withdraws from Bid for Warner Bros., Paramount Skydance Wins Deal

Netflix Inc. has pulled out of the competition to acquire Warner Bros., paving the way for rivals Paramount Skydance Corp. to win the $111 billion deal for the renowned Hollywood film studio.

Bloomberg reported that Netflix decided to step back from the deal after negotiating terms that would have provided value for shareholders and a clear path to regulatory approval. However, the financial terms required to compete with Paramount Skydance’s latest offer were no longer attractive, and Netflix chose not to raise its bid.

Following the news, Netflix's stock surged by 13% in after-hours trading, reflecting investor satisfaction with the company’s decision to walk away from the deal. Meanwhile, Warner Bros. stock declined as investors no longer expected a bidding war. Paramount’s stock remained stable.

Netflix had initially agreed to purchase Warner Bros. Discovery’s streaming business and studio operations for $82.7 billion (including assumed debt) at $27.75 per share in December. However, Paramount’s competing offer for the entire Warner Bros. company led to a reopened auction, with Warner Bros. ultimately determining that Paramount’s latest offer of $31 per share was "superior."

As a pioneer of online TV, Netflix has built a profitable business with over 325 million global subscribers paying for monthly access to TV shows and movies. In contrast, traditional film and TV producers like Paramount and Warner Bros. launched their own streaming services but have smaller subscriber bases, as traditional television networks lose viewers and advertising revenue.

Paramount’s Fierce Bid

Paramount's offer includes Warner Bros.'s cable networks such as CNN and TNT. David Ellison, a technology heir, began bidding for Warner Bros. in September with a private proposal, just one month after finalizing the merger of his Skydance Media with Paramount. This made Ellison, 43, the head of Paramount's film studio, streaming services, and TV networks like CBS and MTV.

Warner Bros. started accepting offers for its business in October, before agreeing to a deal with Netflix in December. After seemingly losing out, Paramount launched a counteroffensive with a multifaceted plan to re-enter the bidding. The company made a tender offer for Warner Bros. stock directly to shareholders and threatened to initiate a proxy fight to gain control at the next annual shareholder meeting. It also lobbied regulatory authorities and politicians, including President Donald Trump, with David Ellison making several trips to Washington to advocate for his stance.

Paramount revised the terms of its offer after several rejections from Warner Bros., including offering more than $40 billion in personal guarantees from Larry Ellison, David's father and the chairman of Oracle Corp, one of the world’s wealthiest billionaires. Paramount also promised to pay Warner Bros. $2.8 billion as a breakup fee if the deal fell through, and another $7 billion if Paramount’s deal failed to gain regulatory approval.