Netflix Exits Warner Bros. Discovery Deal as Paramount’s Offer Prevails
Netflix has decided to withdraw from its agreement with Warner Bros. Discovery, following the studio’s board choosing an enhanced offer from Paramount as the preferred option.
In a statement released on Thursday, Netflix co-CEOs Ted Sarandos and Greg Peters indicated that Paramount’s improved bid rendered their proposal for Warner Bros. “no longer financially attractive.” They emphasized that it was always seen as something desirable at the right price, not essential at any cost.
“We thought the deal we negotiated would create value for shareholders and had a clear path to regulatory approval. Still, we remain disciplined and cannot match Paramount Skydance’s latest offer as it no longer makes financial sense,” they explained.
The executives expressed gratitude towards Warner Bros. leadership, including David Zaslav and others, for conducting a thorough and fair process, remarking that they could have been effective caretakers of Warner Bros.
They reassured stakeholders that Netflix will keep investing in building a high-quality streaming service and affirmed that the brand would continue to be “healthy, strong, and growing organically.”
This year, Netflix plans to invest around $20 billion in quality films and series while also expanding their entertainment lineup. They will resume their stock repurchase program in line with their capital allocation principles, maintaining their commitment to delight customers and drive long-term shareholder value for over two decades.
This announcement follows the confirmation from Warner Bros. Discovery’s board that Paramount’s offer was a superior choice compared to the original Netflix proposal.
Paramount’s latest offer stands at $31 per share, which includes several incentives, such as a ticking fee of $0.25 per quarter starting on September 30, 2026, and a $7 billion payout if the transaction fails due to regulatory issues.
Furthermore, Paramount agreed to cover the $2.8 billion termination fee that Warner Bros. would owe Netflix for backing out of the existing merger agreement.
Following the announcement, Netflix’s stock increased by 10% in after-hours trading, which included the anticipated $2.8 billion termination payment.
Meanwhile, Paramount CEO David Ellison expressed gratitude to the Warner Bros. Discovery board before Netflix officially pulled out. “We are pleased that WBD’s board has unanimously recognized the superior value of our proposal, ensuring WBD shareholders receive more value, certainty, and a swift closing,” he stated.
