Netflix Shares Soar After Abandoning Warner Bros. Discovery Acquisition Attempt

Key Takeaways

• The streaming giant abandoned its pursuit of Warner Bros. Discovery properties after WBD’s board determined that Paramount Skydance’s enhanced $31-per-share proposal represented a better deal.
• The revised Paramount offer increased from $30 to $31 per share in all-cash terms, encompassing WBD’s entire portfolio including CNN, HBO, and traditional cable networks.
• Netflix chose not to counter the higher price, stating the acquisition was “no longer financially attractive” at the increased valuation.
• The Paramount agreement includes payment of Netflix’s $2.8 billion termination fee from WBD, alongside a commitment to a $7 billion penalty if the transaction collapses.
• Shares of Netflix climbed approximately 10% during extended trading hours; WBD dropped roughly 2%, while Paramount rose about 5%.

Shares of Netflix ($NFLX) experienced a significant surge during Thursday’s after-hours session following the streaming platform’s decision to abandon its proposed acquisition of Warner Bros. Discovery properties, positioning Paramount Skydance as the frontrunner in a transaction worth approximately $111 billion.

Netflix, Inc., NFLX

Warner Bros. Discovery’s board of directors determined that Paramount’s increased proposal of $31 per share in cash constituted a “superior offer” compared to Netflix’s standing agreement, which was priced at $27.75 per share and encompassed only WBD’s film studio and streaming operations.

Netflix was granted four business days to submit a revised proposal. The company declined to do so.

Investors responded favorably to the strategic restraint. Shares of Netflix rose approximately 10% during after-hours activity.

During the previous week, Netflix had voluntarily granted WBD a seven-day extension to pursue discussions with Paramount, allowing shareholders to evaluate all available alternatives. Sarandos explained to CNBC that the decision aimed to provide “complete clarity and certainty.”

Ultimately, this accommodation facilitated Netflix’s own withdrawal from the bidding process.

Details of Paramount’s Acquisition

Paramount’s all-cash $31-per-share proposal encompasses the complete WBD entity — extending beyond just the studio and streaming divisions to include CNN, TBS, TNT, HBO Max, Food Network, and various sports broadcasting rights.

This represents a substantially broader acquisition than what Netflix had originally proposed to purchase.

Additionally, Paramount committed to covering the $2.8 billion termination payment WBD owes Netflix, while establishing its own $7 billion breakup fee should the transaction fail to receive regulatory approval.

Paramount Skydance CEO David Ellison stated the proposal provides “superior value, certainty and speed to closing.”

Regulatory Review Process Looms

The proposed merger would require clearance from both the U.S. Department of Justice and European regulatory authorities.

Paramount’s financing structure — featuring connections to technology magnate Larry Ellison and previous participation from Jared Kushner’s Affinity Partners investment vehicle — has attracted examination regarding political ties to the Trump administration.

Kushner’s organization withdrew its involvement in December. However, concerns surrounding the deal’s political implications persist, especially concerning CNN, which Trump has consistently targeted and suggested should be divested as part of any WBD deal.

Netflix shares climbed roughly 10%, WBD declined approximately 2%, and Paramount advanced about 5% during Thursday’s extended trading session.

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