Netflix Withdraws From Warner Bros Acquisition as Paramount Emerges as Lead Bidder

According to Netflix's press release, Warner Bros. Discovery informed the company that Paramount Skydance's latest proposal constituted a "Superior Proposal" under the terms of their existing merger agreement.

"The transaction we negotiated would have created shareholder value with a clear path to regulatory approval," Netflix co-CEOs Ted Sarandos and Greg Peters said in a statement. "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."

"This transaction was always a "nice to have" at the right price, not a "must have" at any price," they added.

Netflix had previously agreed in December to acquire Warner Bros. film and streaming assets at $27.75 per share, valuing the deal at roughly $82bn, including debt, according to BBC reporting at the time. However, Paramount Skydance later increased its offer to $31 per share in cash to acquire the entire company, as reported by the BBC.

In its press release, Netflix also emphasised that its business remains "healthy, strong and growing organically," with plans to invest approximately $20bn this year in films and series, while resuming its share repurchase programme.

Paramount Skydance's $110bn Acquisition Could Reshape Hollywood

With Netflix stepping aside, Paramount Skydance is now positioned to take over Warner Bros. Discovery in a deal reportedly valued at around $110bn, according to the BBC.

If approved, the acquisition would combine two major Hollywood studios under one corporate umbrella. Paramount's traditional networks -including CBS, Nickelodeon, and Comedy Central- would join Warner's assets such as CNN, HBO, and its film franchises.

The combined entity would bring together blockbuster franchises from both studios, raising questions about consolidation in Hollywood and the future of theatrical films and streaming competition.

Paramount, backed by tech billionaire Larry Ellison and led by his son David Ellison, has also agreed to pay a $7 billion regulatory termination fee should the deal fall through, and to cover the $2.8 billion breakup fee Warner Bros. had agreed to pay Netflix, according to a BBC report.

Regulatory Scrutiny and Political Attention Surround the Deal

Despite Paramount Skydance emerging as the leading bidder, regulatory approval remains a significant hurdle.

California Attorney General Rob Bonta said the potential merger "is not a done deal," confirming that the California Department of Justice has an open investigation, according to the BBC. The deal would also require approval from the US Department of Justice and European Regulators.

The financing and political context of the bid have drawn scrutiny, particularly because of Larry Ellison's political ties and Donald Trump's previous public remarks about CNN, which Warner Bros. Discovery owns.

Industry observers cited by the BBC noted that any merger of this scale could have significant implications for newsroom independence, employment levels, and media competition, particularly in California, where the entertainment sector represents a critical part of the economy.

What Netflix's Withdrawal Means for the Streaming Industry

Netflix's withdrawal underscores its steadfast commitment to financial discipline and organic growth rather than high-cost acquisitions.

While the company said in its press release that it believed it would have been a strong steward of Warner Bros.' iconic brands and could have strengthened the entertainment industry, it ultimately determined that matching Paramount's revised bid did not align with its capital allocation strategy.

The months-long bidding war between Netflix and Paramount Skydance has been closely watched across Hollywood. With Netflix now out of the race, attention turns to regulators and shareholders who will determine whether Paramount's proposed acquisition of Warner Bros. Discovery proceeds.

If approved, the takeover would mark one of the most significant restructurings in modern media history, with lasting ramifications for streaming platforms, legacy film studios, broadcast networks, and the broader entertainment industry.

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Read the BBC's report here