Netflix drops bid for Warner Bros, clearing way for Paramount takeover

Netflix has backed away from its proposal to buy Warner Bros Discovery, clearing the way for Paramount Skydance to win the months-long takeover battle.

Warner Bros, which put itself up for sale last year, on Thursday said Paramount's latest bid was "superior" to Netflix's offer and called on the streaming company to raise its offer.

"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," Netflix co-chief executives Ted Sarandos and Greg Peters said.

"The transaction we negotiated would have created shareholder value with a clear path to regulatory approval," Sarandos and Peters said in a statement. "However, we've always been disciplined."

"This transaction was always a 'nice to have' at the right price, not a 'must have' at any price," the Netflix executives added.

The announcement came just hours after Sarandos had visited the White House on Thursday.

Last December, Warner Bros agreed to a takeover offer from Netflix for some of its assets. But Paramount, which is backed by tech billionaire Larry Ellison and led by his son David, made a rival offer as it looks to transform itself into a Hollywood heavyweight.

Paramount previously found itself rebuffed by Warner Bros.

On Thursday, chief executive David Ellison welcomed the Warner Bros board's decision in favour of Paramount's sweetened offer. The proposal, he said in a statement, offers Warner Bros shareholders "superior value, certainty and speed to closing".

If Paramount's deal is approved by regulators, the company would fold Warner Bros' HBO Max streaming customers into its portfolio. It would also take ownership of CNN, the Food Network and a range of sports offerings.

Paramount's traditional networks already include brands such as Nickelodeon, CBS and Comedy Central.

Many in Hollywood have viewed the bidding war between Netflix and Paramount as a battle with no good winner.

Critics of a deal with Netflix voiced concern that the storied movie studio would be lost to the Silicon Valley streaming titan, paving the way for the depletion of cinema. But a merger with Paramount, which has touted itself among the last standing movie studios in Hollywood, also left critics unnerved over the company's perceived political connections with the Trump administration.

Across the board, the selling of Warner Bros will have massive ramification across Tinsel town, with all but assured cuts to staff in a city that has been marred by continued production cuts.

In December, the Warner Bros said it had agreed to sell its film and streaming divisions, including HBO, to Netflix in a deal worth $27.75 per share or roughly $82bn (£61bn), including debt.

Warner Bros said it would spin-off the remainder of its business, including traditional television networks and the news channel CNN, as an independent company.

But in a last-ditch push, Paramount this week agreed to pay more for a Warner Bros takeover. The company offered $31 per share in cash, up from $30 per share to take over the entire company.

It also agreed to pay $7bn should the deal fall through and cover the $2.8bn fee Warner Bros had agreed to pay Netflix in the event of a break-up of the merger plan.

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