Netflix said Thursday it would not submit a higher offer for Warner Bros. Discovery after the company’s board described Paramount Skydance’s latest offer as “superior.”
The stunning twist leaves Paramount Skydance, headed by CEO David Ellison, as the remaining bidder and in position to take control of the storied media giant.
Paramount’s bid was for the entire company, while Netflix was seeking to acquire only its streaming service, HBO cable channel and film studio business.
“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval,” Netflix said in a statement Thursday afternoon. “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.”
Netflix co-CEOs Ted Sarandos and Greg Peters said that “this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
Netflix shares soared as much as 15% in after-hours trading on the news, signaling relief from shareholders who have seen the stock decline by more than 20% since the Warner Bros. Discovery-Netflix bid was officially announced in December.
Paramount’s updated offer, released Tuesday, raised the purchase price to $31 a share from $30 — a deal that would value Warner Bros. Discovery at roughly $77 billion. The proposal also included a $7 billion reverse termination fee if regulators block the deal, along with reimbursement for Warner Bros. Discovery’s potential cost to cancel its deal with Netflix.
Including Warner Bros. Discovery’s debt, the takeover bid comes to a grand total of more than $110 billion.
“We are pleased WBD’s Board has unanimously affirmed the superior value of our offer,” Ellison said. He said his deal would offer “certainty and speed to closing.”
The deal is not finalized yet, however. A Warner Bros. Discovery shareholder vote is scheduled for March 20, and the company and Paramount will need to agree to and release specific and detailed deal terms soon.
Warner Bros. Discovery’s board of directors will also have to approve a formal termination of the Netflix agreement. The board could vote on that as early as Friday, a person familiar the situation said.
A deal between Paramount Skydance and Warner Bros. Discovery would also need to be approved by government regulators.
"Netflix is a great company and throughout this process Ted, Greg, Spence and everyone there have been extraordinary partners to us. We wish them well in the future," David Zaslav, president and CEO of Warner Bros. Discovery, said in a statement.
Zaslav said that once the Warner Bros. Discovery board "votes to adopt the Paramount merger agreement, it will create tremendous value for our shareholders." He added that he is "excited about the potential" the deal will generate.
Warner Bros. Discovery Chairman Samuel Di Piazza said in a statement that he was "extremely proud of the rigorous process this Board has run over the past five and a half months that has led us to the cusp of combining these two storied companies and the excitement it will bring to audiences for many years to come."
Paramount originally sparked a bidding war last fall when it began submitting unsolicited bids for Warner Bros. Discovery. WBD, which owns CNN and HBO, declined multiple bids before it agreed in December to sell parts of the company to Netflix in a $72 billion deal.
Netflix has been actively lobbying for its bid, and despite Paramount’s many failed bids, it, too, has been staying in the discussion about the future of Warner Bros. Discovery in Washington and beyond.
Ellison was in Washington this week attending President Donald Trump’s State of the Union address as a guest of Sen. Lindsey Graham, R-S.C., according to a photo on X. Sarandos, of Netflix, was also seen arriving at the White House just before 4 p.m. ET Thursday.
Sarandos visited Trump in the Oval Office last year, with Trump describing him as “fantastic” on Dec. 7. But moments later, he said a Netflix and Warner Bros. Discovery combination “could be a problem” because of how much market share the resulting company would have.
Sarandos also testified at a Senate Judiciary subcommittee hearing this month, arguing that Netflix’s proposed deal with Warner Bros. would “create more economic growth.”
“This is not a typical media merger where you end up with what’s called the Noah’s Ark problem — two of everything,” Sarandos said at the time. “We are buying a company that has assets that we do not, and we will keep investing in those.”
This week, the same subcommittee announced a second hearing on Netflix and Warner Bros. Discovery scheduled for Wednesday. It was unclear late Thursday whether the panel would pivot to examining the Paramount deal now that Netflix has bowed out.
But an aide to Sen. Cory Booker of New Jersey, the subcommittee's top Democrat, said Ellison had previously told Booker that "Paramount would be willing to testify before Congress were it to acquire Warner Bros. Discovery."
"Next week’s hearing presents a timely and appropriate opportunity for Mr. Ellison to make good on that commitment," the aide said.
Ellison is the son of Larry Ellison, the billionaire co-founder of Oracle. The Ellisons are the controlling shareholders of Paramount, and the elder Ellison has a close relationship with Trump.
Trump has also given conflicting signals about how he feels about the Ellisons and Paramount. After the Trump administration approved the Ellisons’ takeover of Paramount, Trump said on Truth Social that “60 Minutes has treated me far worse since the so-called ‘takeover,’ than they have ever treated me before. If they are friends, I’d hate to see my enemies!”
Trump recently told NBC News that he would stay out of the antitrust process, but he previously indicated multiple times that he would be personally involved.
Before Thursday, Warner Bros. Discovery had consistently categorized the Netflix proposal as the superior bid for shareholders.
A prominent investor, Mario Gabelli, whose firm GAMCO owns more than 5 million shares of Warner Bros., told NBC News that “the board finally woke up and did the math” on Paramount’s revised offer, calling it the superior valuation for shareholders. Gabelli has consistently favored the Paramount deal, having previously told NBC News that Netflix’s initial offer was overly complicated compared with Paramount’s.
If it is completed, the deal could result in major changes for many household brands. For example, CNN would become a part of Paramount, which owns CBS News.
CBS News has been undergoing its own transformation. Former New York Times opinion writer Bari Weiss, who was named editor-in-chief of the network’s news division, has overhauled “CBS Evening News” and added a number of controversial figures as contributors.
Already, CBS News has become a flash point for the Ellisons and Weiss after at least one major “60 Minutes” piece that focused on the Trump administration’s immigration policies was held. Weiss said at the time that the piece was not “ready.”
HBO would also join the same company as Showtime, a competing cable channel, and the HBO Max and Paramount+ streaming services would be under the same roof, too.
