Paramount Skydance Wins Bidding for Warner Bros Discovery as Netflix Bows Out

Paramount Skydance has emerged as the victor in the months-long race to acquire Warner Bros Discovery after Netflix on Thursday declined to raise its bid for the Hollywood studio.

Netflix said in a statement that it would not match Paramount Skydance’s latest offer. “We’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid,” the streaming giant said. Netflix confirmed to Reuters that it was walking away from the negotiations.

The Warner Bros board must now terminate the previous Netflix agreement and adopt Paramount Skydance’s proposal. Warner Bros CEO David Zaslav said the merger would create “tremendous value for our shareholders.” He added, “We are excited about the potential of a combined Paramount Skydance and Warner Bros Discovery and can’t wait to get started working together telling the stories that move the world.”

Paramount Skydance pursued Warner Bros aggressively, launching a campaign to win the studio away from Netflix. Last week, Paramount drew Warner Bros back to the bargaining table with a revised cash offer. Earlier Thursday, Warner Bros confirmed that Paramount’s $31-a-share bid was superior to Netflix’s $27.75 offer for the company’s streaming and studio assets.

A Netflix adviser, speaking on condition of anonymity, said the company was advised to withdraw because the deal no longer made economic sense. Netflix co-CEO Ted Sarandos had previously indicated in a February interview that the streaming service would not substantially raise its offer, emphasizing that Netflix had been “very disciplined buyers.” The adviser described Paramount’s offer as coming from a billionaire willing to pay a price Netflix deemed irrational, referring to Larry Ellison, co-founder and executive chairman of Oracle and father of Paramount CEO David Ellison.

Netflix shares rose more than 10 percent after the announcement.

Paramount’s acquisition would combine two major Hollywood studios, two streaming platforms—HBO Max and Paramount+—and two news operations, CNN and CBS. Analysts noted the deal would likely face antitrust scrutiny in the United States and abroad, particularly from California regulators. California Attorney General Rob Bonta said on Thursday that regulatory review is ongoing. Democratic Senators Elizabeth Warren, Bernie Sanders, and Richard Blumenthal have expressed concerns about potential political influence on approval.

Paramount increased the termination fee in its revised bid to $7 billion from $5.8 billion and agreed to cover the $2.8 billion fee Warner Bros would owe Netflix for walking away from the prior deal. The Ellison Trust is committing $45.7 billion in equity, up from $43.6 billion, while Bank of America Merrill Lynch, Citi, and Apollo are providing $57.5 billion in debt financing.

Activist investor Ancora Holdings, a small Warner Bros shareholder, welcomed the outcome, noting that Netflix’s decision “has paved the way for shareholders to receive meaningfully more cash and a truly viable path to government approvals. This is a win-win for shareholders and the industry.”