Netflix bows out of Warner Bros. bidding war, clearing path for Paramount deal

Netflix has withdrawn from the race to acquire Warner Bros., paving the way for rival bidder Paramount to finalize a $111 billion deal for the historic Hollywood studio.

The streaming giant stated that while it believes the merger would have been approved by regulators and would have created shareholder value, it no longer wishes to pursue the bid.

“We have always been disciplined,” the company said in a statement on Thursday. “With the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive.”

Instead, Netflix will continue to invest in its core business, including an allocation of approximately $20 billion this year for films, TV series, and other entertainment content.

Netflix shares rose by as much as 13% in after-hours trading, indicating that investors are satisfied with the company’s decision to abandon the bid.

Warner Bros. shares declined as investors no longer anticipate a bidding war, while Paramount shares remained largely unchanged.

In December, Netflix had signed an agreement to purchase the studio and publishing businesses of Warner Bros. for $82.7 billion.

However, repeated counter-offers from Paramount for the entirety of the company kept the auction active.

Late Thursday, Warner Bros. deemed Paramount’s final offer of $31 per share to be the superior proposal.

Warner Bros. CEO David Zaslav said in a statement:

“When our board voted to accept the Paramount merger agreement, it will create tremendous value for our shareholders. We are excited about the potential of the combination of Paramount Skydance and Warner Bros. Discovery and look forward to beginning to work together to tell stories that move the world.”

Activist investor Ancora Holdings Group, a stakeholder in Warner Bros., stated that Netflix’s decision not to increase its bid “paves the way for shareholders to receive significantly more cash and a truly viable path for government approvals,” adding, “This is a win-win for shareholders and the industry.”

The acquisition battle has become a contentious issue in both Hollywood and Washington. Netflix CEO Ted Sarandos and Paramount CEO David Ellison traveled to the capital this week to meet with members of Congress.

Sarandos met with officials from the Trump administration for approximately an hour on Thursday. Upon leaving the White House, he said, “I will not be speaking with the press today.”

Ellison, meanwhile, attended President Trump’s State of the Union address on Tuesday as a guest of Republican Senator Lindsey Graham.

Paramount will remain under constant scrutiny regarding the deal. The US Senate Judiciary Committee scheduled a hearing for March 4 to re-examine the Warner Bros. sale, following a hearing held earlier this month.

New Jersey Senator Cory Booker has again invited Ellison to the hearing.

Democratic Senator Elizabeth Warren also weighed in on the Paramount deal:

“The Paramount Skydance-Warner Bros. merger is an antitrust disaster that means higher prices and fewer choices for American families. A handful of billionaires close to Trump are trying to take control of the content you watch and charge you whatever price they want.”

Traditional film and TV producers like Paramount and Warner Bros. have launched their own streaming arms, but they lack the subscriber base held by their rivals as their traditional networks continue to lose viewers and advertisers.

Paramount’s offer also included Warner Bros. cable TV networks, such as CNN and TNT. The company initiated the tender process with a private offer in September.

This came just one month after Ellison completed the merger of Skydance Media with Paramount, taking control of the Paramount film studio, the streaming service, and TV networks such as CBS and MTV.

Warner Bros. began receiving bids for the business in October, before finalizing the deal with Netflix in December.

After seemingly losing the fight, Paramount launched a multi-pronged campaign to get back into the game.

The company launched a tender offer for Warner Bros. shares and threatened a proxy battle at the next annual meeting.

The company lobbied regulators and politicians, including President Donald Trump, and Ellison traveled to Washington multiple times to plead his case.

Paramount made changes to the terms of its offer after being rejected multiple times by Warner Bros.

These changes included personal guarantees for $45.7 billion in stock created by a trust formed by Ellison’s father, Oracle Chairman Larry Ellison, who is one of the world’s wealthiest men and an ally of President Trump.

Paramount also committed to paying Warner Bros. $2.8 billion to terminate its agreement with Netflix and to pay Warner Bros. $7 billion should the deal fail to secure the necessary regulatory approvals.

On Thursday, Paramount announced it had a commitment for $57.5 billion in debt financing provided by Bank of America, Citigroup, and Apollo Global. These three firms had previously committed $54 billion.