Netflix backs out of bid for Warner Bros. Discovery, giving studios, HBO, and CNN to Ellison-owned Paramount

In a flurry of deal offers in the high tens of billions of dollars, the bidding war for Warner Bros. Discovery is over. David Ellison-owned Paramount will acquire Warner Bros. Discovery.

On Thursday, Warner Bros. Discovery announced that Paramount Skydance’s newest offer of $31 a share was a “superior proposal,” giving Netflix four business days to counter. Netflix then said it would not raise its $82.7 billion all-cash bid for the legacy studio, and would walk away from the deal.

“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval,” said Netflix co-CEOs Ted Sarandos and Greg Peters in a statement Thursday. “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.”

Per the terms of the original deal, Warner Bros. Discovery will have to pay a $2.8 billion termination fee to Netflix to end the existing agreement. Paramount’s renewed offer — backed by the world’s sixth-richest person, Oracle’s executive chair, and David Ellison’s father, Larry Ellison — includes paying that breakup fee.

The new deal will see Paramount, which was bought just last year by Ellison’s Skydance Media with heavy financial backing from his father, acquiring the entirety of Warner Bros. Discovery, including its studios, HBO, its streaming service, its games and entertainment divisions, and linear television networks like CNN, TBS, TNT, Discovery, and HGTV.

Ellison, whose Paramount already owns major studios, entertainment, and news businesses, has warned of significant job cuts. His ownership of news network CBS has also attracted controversy and has largely been seen as a sympathetic turn toward the Trump administration, with reporting critical of the administration shelved or facing increased scrutiny by Ellison and CBS’s editor-in-chief, the conservative provocateur Bari Weiss. Larry Ellison is a major donor and supporter of President Trump.

Netflix had announced its intent to acquire WBD in December, offering nearly $83 billion for its studios and streaming service alone. Despite several hostile takeover bids by Paramount, Warner Bros. Discovery reaffirmed to shareholders its belief that Netflix’s offer was superior to Paramount’s, which offered $108 billion for the full company including its linear television networks. Paramount’s newest bid, of $31 a share, values WBD at about $111 billion.

Paramount will take on the about $33 billion in debt held by Warner Bros. Discovery, according to the deal. Larry Ellison, whose net worth is $201 billion, according to Bloomberg, has agreed to supply the additional equity to fulfill Paramount’s bid. Paramount’s market cap is about $12 billion.

The deal is also being financed by a $57.5 billion debt commitment from Bank of America Merrill Lynch, Citi, and Apollo Global Management.

Netflix shares jumped as much as 10% in after-hours trading in New York. Shares in Paramount were up 4.5%.