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In a dramatic conclusion to one of the most closely watched media bidding wars in recent memory, Netflix has formally declined to increase its offer for Warner Bros., effectively clearing the path for David Ellison's Paramount Skydance to take control of the storied Hollywood studio.
The decision was confirmed Thursday by Netflix co-CEOs Ted Sarandos and Greg Peters, who outlined their rationale in a detailed statement emphasizing financial discipline over strategic ambition.
"The transaction we negotiated would have created shareholder value with a clear path to regulatory approval," the co-CEOs began.
"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."
Paramount Skydance's proposal reshapes the landscape
With Netflix stepping aside, the board of Warner Bros. Discovery has identified Paramount Skydance's offer as a "superior proposal," positioning it as the likely acquirer pending regulatory approval and a formal board vote.
The latest proposal from Paramount Skydance reportedly values shares at $31 apiece and includes several additional financial incentives.
Among them is a ticking fee payable to shareholders equal to $0.25 per quarter beginning after September 30, 2026, as well as a substantial $7 billion regulatory termination fee should the transaction fail to close due to antitrust or other regulatory barriers.
Additionally, Paramount has agreed to cover the $2.8 billion termination fee owed to Netflix under the existing merger agreement.
For Netflix, the outcome may still prove lucrative. If the merger proceeds as anticipated, the streaming giant will receive that $2.8 billion termination payment.
Investors reacted swiftly to the news, sending Netflix shares up more than 10 percent in after-hours trading.
David Zaslav, president and CEO of Warner Bros. Discovery, struck a conciliatory tone in his public remarks.
"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," he said.
"Once our Board votes to adopt the Paramount merger agreement, it will create tremendous value for our shareholders.
"We are excited about the potential of a combined Paramount Skydance and Warner Bros. Discovery and can't wait to get started working together telling the stories that move the world."
Earlier in the day, Ellison, CEO of Paramount, outlined his confidence behind his company's bid.
"We are pleased WBD's Board has unanimously affirmed the superior value of our offer, which delivers to WBD shareholders superior value, certainty and speed to closing," he said.
Why the deal could still fall through
Despite the board's endorsement, the deal is not yet guaranteed.
U.S. and European regulators must formally approve the merger, and state attorneys general are expected to scrutinize the transaction.
Political opposition is already emerging, with Elizabeth Warren labeling the proposed merger an "antitrust disaster" and signaling potential congressional review, which could see Ellison called to testify.
If completed, the union of Paramount Skydance and Warner Bros. Discovery would mark a seismic shift in the entertainment industry.
Not only does it consolidate iconic film and television assets under one umbrella, it also signals that in the evolving streaming era, scale and financial discipline remain decisive forces.