Streaming leader Netflix said overnight in the U.S. that exceeding Paramount’s $111 billion (£82.2 billion) offer for Warner Bros would make the transaction financially unattractive.
Warner Bros’ board has not yet fully endorsed Paramount’s proposal and continues to recommend Netflix’s bid, but late Thursday it acknowledged that Paramount’s recently increased $31-per-share offer is “superior.”
The assessment effectively clears a path for Paramount to prevail in the months-long takeover battle, which began when Warner Bros put itself up for sale last year.
Unlike Netflix, Paramount is seeking to acquire the entirety of Warner Bros’ business, including networks such as CNN and Discovery, along with HBO Max, DC Studios, and major franchises like Harry Potter.
The Paramount logo appears on the water tower at Paramount Studios.
The move would fold the assets into CBS under Paramount and effectively unite two of the last five major Hollywood studios.
A takeover of Warner Bros. by Paramount would dramatically alter both Hollywood and the broader media industry.
Warner titles such as Superman, Barbie, and One Battle After Another — along with hit series like The White Lotus and Succession — would be added to Paramount’s large catalog, which already includes the Mission: Impossible and Star Trek franchises.
However, lawmakers and industry trade organizations have warned that further consolidation could place even more power in the hands of a few dominant companies.
They worry this could trigger additional layoffs, reduce content diversity, and potentially drive up streaming costs for viewers.
Although Paramount initially took a hostile stance, it argues the merger would benefit both the industry and consumers — but the deal would still face tough antitrust scrutiny in the United States and Europe.
Netflix had previously agreed last December to acquire Warner Bros.’ studio and streaming operations in a deal valued at about $82 billion (£61 billion), including debt.
Co-CEOs Ted Sarandos and Greg Peters said following Paramount’s latest offer: “The transaction we negotiated would have delivered shareholder value with a clear path to regulatory approval.”
An aerial shot shows the Netflix logo at its studio lot with the Hollywood Sign visible in the background.
“However, we have remained disciplined, and at the price needed to match Paramount Skydance’s latest bid, the transaction no longer makes financial sense for us, so we will not match the offer.”
They added: “We believe we would have been responsible stewards of Warner Bros.’ renowned brands.
“But this deal was always a ‘nice to have’ at the right valuation, rather than a ‘must have’ at any cost.”
Dan Coatsworth, head of markets at AJ Bell, said Paramount’s apparent win “could be positive news for Netflix subscribers.”
He explained: “Had Netflix acquired Warner Bros., there was a genuine risk the company would have significantly raised subscription prices to help fund the purchase, justifying the increases with stronger content.”
Technology analyst Ben Barringer of Quilter Cheviot said Netflix’s decision to step away was “a positive outcome for all parties.”
“Netflix arguably did not need the acquisition, so it is encouraging that the company can now concentrate on its core strengths — content production, user engagement, and pricing,” he said.
He added that Paramount is now better positioned to compete with Disney, but has also “taken on substantial debt” as part of the transaction.