Netflix walks away from Warner Bros deal, clearing the path for Paramount

Netflix Walks Away from Warner Bros. Deal, Clearing Path for Paramount Takeover

Netflix has declined to increase its offer to purchase Warner Bros. Discovery’s studio and streaming business, effectively abandoning the deal and paving the way for Paramount to acquire the iconic Hollywood studio.

In a surprising announcement Thursday, Netflix co-CEOs Ted Sarandos and Greg Peters stated that matching Paramount’s superior offer would make the acquisition “no longer financially attractive” to the streaming giant.

“We believe we would have been strong stewards of Warner Bros.’ iconic brands,” Sarandos and Peters said in a joint statement. “But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”

Netflix’s decision came shortly after Warner Bros. Discovery’s board announced that Paramount’s revised proposal was superior to Netflix’s previous agreement. Paramount, now owned by Skydance Media, raised its bid to $31 per share for the entire company, compared to Netflix’s offer of $27.75 per share for just the studio and streaming assets.

The Netflix withdrawal represents a dramatic shift in what has become a high-stakes bidding war that will reshape Hollywood’s competitive landscape. While Netflix sought only Warner’s studio and streaming operations, Paramount is pursuing the entire Warner Bros. Discovery portfolio, which includes HBO Max, the Warner Bros. film studio, and media properties like CNN.

Industry analysts suggest the combined Paramount-Warner entity would create a formidable media conglomerate, bringing together two of Hollywood’s five remaining legacy studios. Warner’s valuable intellectual property — including franchises like “Harry Potter,” “Superman,” and “Barbie,” plus acclaimed series such as “Succession” and “The White Lotus” — would join Paramount’s portfolio of “Top Gun,” “Titanic,” “The Godfather,” and networks like CBS, MTV, and Nickelodeon.

The potential consolidation has raised significant regulatory and antitrust concerns. The U.S. Department of Justice has already begun reviewing the proposed merger, with international regulators expected to follow suit. Critics warn that further industry consolidation could lead to job losses, reduced content diversity, and potentially higher costs for consumers already facing rising streaming subscription prices.

Paramount has taken steps to address regulatory hurdles in its revised offer, agreeing to a substantial $7 billion termination fee if the deal fails to receive necessary approvals. The company also accelerated its “ticking fee” timeline, agreeing to pay shareholders an additional 25 cents per share if the acquisition isn’t completed by the end of September 2024, rather than the end of the year as previously proposed.

The financing structure behind Paramount’s bid has drawn scrutiny. The company is taking on billions in debt to fund the acquisition, with significant backing from Oracle founder Larry Ellison, father of Skydance CEO David Ellison. Foreign sovereign wealth funds have also provided equity for the offer.

Political dimensions have further complicated the situation. The Ellisons maintain a close relationship with former President Donald Trump, who previously made controversial statements suggesting his involvement in approving such a deal before walking those comments back. Trump has said regulatory approval will ultimately rest with the Justice Department.

The Warner Bros. pursuit comes just months after Skydance completed its own contentious acquisition of Paramount. That merger was approved shortly after the company agreed to pay $16 million to settle a lawsuit related to editing practices at CBS’ “60 Minutes” program.

For CNN and other Warner news properties, the Paramount takeover raises questions about potential editorial shifts. Critics point to recent changes at CBS News under Skydance ownership, including the hiring of Free Press founder Bari Weiss, as potential indicators of what might occur at CNN should the acquisition proceed.

Neither Paramount nor Warner Bros. Discovery immediately responded to requests for comment regarding Netflix’s decision to abandon the bidding process.