That’s All, Folks: Netflix Walks Away From Warner Bros., Refusing To Raise Offer

Netflix has thrown in the towel and won’t be raising its offer for Warner Bros. to match a rival bid by Paramount — game-changing news that caps several days of action around the bidding war.

The move comes two hours after Warner Bros. Discovery said it determined that the latest offer it received from Paramount was superior to the $82.7 billion deal it signed with Netflix on December 5.

Netflix still had four business days to match Paramount’s offer but decided, why wait? Co-CEOs Ted Sarandos and Greg Peters regretfully took the company out of the running, saying, “We’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive.” Read a joint statement from the two executive below.

Netflix investors are relieved, no regrets. The stock is up 10%.

The drama began six month ago, and truth be told, Paramount was in there first as CEO David Ellison set his sights on Warner Bros Discovery almost immediately after closing the Skydance-Paramount merger in August. He began making rapid-fire offers, all rejected, pushing the WBD board to open things up with a formal auction process that resulted in four offers — from Paramount, Netflix, Comcast and one mystery bidder never specified.

“This transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
— Netflix co-CEOs Ted Sarandos and Greg Peters

WBD clinched a a deal to sell Warner Bros’.’ streaming and studio assets to Netflix, a major departure for the streamer that tends to grow organically. Paramount launched a hostile tender offer, threatened a proxy fight and things got noisy. It sweetened its offer several times but continually was rebuffed by WBD until this week. A seven-day negotiating window ended with a new offer that Warner felt was superior to the Netflix deal.

Paramount raised its offer price to $31 a share in cash, from $30, but also addressed other concerns raised by the WBD including around financing guarantees. The two sides now are working on the text of a final agreement, which would need approval by WBD shareholders and a green light from regulators in the U.S. and other territories. Hollywood players, Wall Streeters, public interest groups guilds and lawmakers will know, definitively, where to direct their fire.

Netflix issued this statement from its co-CEOs Sarandos and Peters:

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.

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.

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.

We will continue to do what we’ve done for more than 20 years as a public company: delight our members, profitably grow our business, and drive long-term shareholder value.