Paramount Global moved into pole position to acquire Warner Bros. Discovery after Netflix dramatically backed out of the months-long bidding war on Thursday, clearing the path for a potential takeover of the media giant and its prized assets, including CNN.
Netflix confirmed it has “declined to raise its offer for Warner Bros.” after the WBD board determined that Paramount had tabled a “superior” proposal.
“The deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid,” the streamer said, abruptly ending the high-stakes corporate standoff.
The withdrawal significantly reshapes the takeover battle, leaving Paramount, backed by Skydance, on the verge of assembling a vast entertainment and news empire spanning CNN, HBO, multiple film studios and dozens of television networks.
Regulatory review is expected to take several months, but absent any unexpected hurdles, Paramount CEO David Ellison appears set to oversee one of the largest consolidations in modern media.
WBD CEO David Zaslav struck a conciliatory tone following Netflix’s decision.
“Once our Board votes to adopt the Paramount merger agreement, it will create tremendous value for our shareholders,” Zaslav said, noting that WBD’s stock more than doubled during the prolonged bidding contest. Paramount’s most recent offer stands at $31 per share.
“We are excited about the potential of a combined Paramount Skydance and Warner Bros. Discovery,” Zaslav added, “and can’t wait to get started working together telling the stories that move the world.”
Investors reacted swiftly to Netflix’s retreat. Shares of the streaming giant jumped 9% in after-hours trading, signaling relief among shareholders who appeared wary of escalating acquisition costs.
The Trump factor
The dramatic shift unfolded the same day Netflix co-CEO Ted Sarandos visited the White House. He was seen leaving the complex looking somber, fueling political speculation.
Democratic Senator Elizabeth Warren quickly questioned whether discussions between Sarandos and officials in the Trump administration played a role in the abrupt reversal.
“What did Trump officials tell the Netflix CEO today at the White House?” Warren wrote on X, adding that it “looks like crony capitalism with the President corrupting the merger process in favor of the billionaire Ellison family.”
Donald Trump had previously signaled a preference for Paramount over Netflix, though his public comments on the mega-merger have at times been inconsistent.
Just days earlier, Trump urged Netflix to remove board member Susan Rice or “pay the consequences.” He had also said in December that it was “imperative that CNN be sold,” a condition that did not align with Netflix’s proposed structure, which would have spun CNN and other cable assets into a separate entity rather than selling them outright.
Paramount, by contrast, has consistently pursued full ownership of WBD, including its cable networks, even while questioning the long-term value of those assets.
A ‘superior’ bid seals the shift
Netflix’s announcement came roughly an hour after WBD’s board formally deemed Paramount’s latest offer “superior” to the existing Netflix agreement covering Warner Bros. and HBO.
The decision marked a dramatic turnaround. Paramount’s pursuit began last summer when Ellison approached Zaslav with an unsolicited offer. WBD initially rejected multiple proposals, expressing skepticism about Paramount’s financial capacity.
After striking a deal with Netflix, however, Paramount escalated matters with a hostile bid.
Last week, Netflix granted WBD a seven-day waiver to engage in talks with Paramount, previously dismissing the rival bid as an “ongoing distraction.” WBD sought what it described as Paramount’s “best and final” offer and received it.
Ellison’s revised proposal, unveiled Tuesday, values WBD at $31 per share and includes a $7 billion regulatory termination fee, along with concessions designed to address the board’s key concerns.
When WBD released quarterly earnings Thursday morning, Zaslav highlighted the financial upside of the bidding war.
The contest, he said, had “led to eight price increases” and “thus far achieved a 63% increase in value versus the first offer received in September, delivering significant value for WBD shareholders throughout the process.”
“Our focus has and always will be maximizing value and certainty while mitigating downside risks,” Zaslav said, “and the board will evaluate any proposal against that standard, with the objective of delivering the best deal for our shareholders.”
White House visit draws scrutiny
Sarandos’ White House visit had been scheduled more than two weeks earlier, according to a Netflix spokesperson, who emphasized that the company did not request a meeting directly with Trump.
“Netflix is meeting with staff members at the White House,” a White House official told CNN.
Analysts had anticipated potential legal challenges from Trump’s Justice Department if the Netflix deal advanced, raising the prospect of lengthy litigation. Despite projecting confidence publicly, Netflix ultimately opted not to increase its bid.
Meanwhile, Ellison has taken visible steps to build ties with Trump, including a private White House meeting earlier this month. Shortly after that encounter, Trump remarked in an interview that “I haven’t been involved” in the WBD battle, despite earlier saying of the Netflix transaction, “I’ll be involved in that decision, too.”
With Netflix stepping aside, Paramount now stands closest to sealing one of the most consequential media mergers in recent years, pending regulatory approval and final board endorsement.
