In a major reversal, Netflix has officially backed out of the bidding war for Warner Bros. Discovery, declining to match Paramount Skydance’s $31 per share offer and effectively clearing the path for David Ellison to win control of the studio.
Netflix co-CEOs Ted Sarandos and Greg Peters confirmed Thursday that the company will not raise its bid, saying the transaction is “no longer financially attractive.”
David Ellison, Chairman and CEO of Paramount, responded: “We are pleased WBD’s Board has unanimously affirmed the superior value of our offer, which delivers to WBD shareholders superior value, certainty and speed to closing.”
Netflix Walks Away
In a joint statement, Sarandos and Peters said the deal “was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval. However, 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 executives thanked Warner Bros. Discovery leadership, including David Zaslav and the board, and said Netflix believed it would have been a strong steward of the company’s brands. Still, they made clear price discipline ultimately drove the decision.
“Warner Bros. is a world-class organization, and we want to thank David Zaslav, Gunnar Wiedenfels, Bruce Campbell, Brad Singer and the WBD Board for running a fair and rigorous process. We believe we would have been strong stewards of Warner Bros.’ iconic brands, and that our deal would have strengthened the entertainment industry and preserved and created more production jobs in the U.S. But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.
Paramount Now Positioned to Win
With Netflix stepping aside, Paramount Skydance’s revised $31 per share cash offer now stands as the only active proposal. Earlier Thursday, the WBD board determined that Paramount’s bid constituted a “Company Superior Proposal.”
The offer includes several sweeteners, including a ticking fee payable to shareholders equal to $0.25 per quarter beginning after September 30, 2026, and a $7 billion regulatory termination fee if the transaction fails due to regulatory issues.
Paramount has also agreed to pay the $2.8 billion termination fee Warner Bros. would owe Netflix upon exiting the existing merger agreement.
Netflix Collects $2.8 Billion
If the Paramount transaction proceeds as expected, Netflix will receive the $2.8 billion breakup fee. Investors appeared to approve of the move, sending Netflix shares up more than 10% in after-hours trading following the announcement.
Netflix Refocuses on Core Business
Sarandos and Peters emphasized that Netflix remains financially strong and will continue investing heavily in content.
“Netflix’s business is healthy, strong and growing organically, powered by our slate and best-in-class streaming service. This year, we’ll invest approximately $20 billion in quality films and series and will expand our entertaining offering. Consistent with our capital allocation policy, we’ll also resume our share repurchase program.”
With Netflix officially out, all signs now point to Paramount Skydance finalizing its takeover of Warner Bros. Discovery, marking a major shift in the entertainment landscape.
