Netflix Inc has dropped out of the fight to buy Warner Bros Discovery Inc, clearing the way for rival bidder Paramount Skydance Corp to clinch its US$111 billion deal for the historic Hollywood studio.
The streaming industry leader said that while it believed its deal would have cleared with regulators and created shareholder value, it did not want to keep bidding.
“We’ve always been disciplined and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive,” Netflix said in a statement on Thursday.
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Instead, it would keep investing in its business, including about US$20 billion this year on films, TV shows and other entertainment offerings, it said.
Netflix inked an US$82.7 billion deal, including assumed debt, to acquire the studio and streaming businesses of Warner Bros in December last year, but repeated counteroffers from Paramount for the entire company kept the auction open.
Late on Thursday, Warner Bros deemed Paramount’s latest US$31-a-share bid the superior offer.
“Once our board votes to adopt the Paramount merger agreement, it will create tremendous value for our shareholders,” Warner Bros chief executive officer David Zaslav said in a statement. “We are excited about the potential of a combined Paramount Skydance and Warner Bros Discovery and can’t wait to get started working together telling the stories that move the world.”
Netflix’s decision not to raise its offer “has paved the way for shareholders to receive meaningfully more cash and a truly viable path to government approvals,” Ancora Holdings Group, an activist investor in Warner Bros, said in a separate statement. “This is a win-win for shareholders and the industry.”
The takeover fight has been contentious, in Hollywood and in Washington. Netflix co-CEO Ted Sarandos and Paramount CEO David Ellison traveled to the US capital this week to meet with lawmakers.
Sarandos spent about an hour on Thursday with officials in the administration of US President Donald Trump.
Ellison attended Trump’s State of the Union address on Tuesday as a guest of US Senator Lindsey Graham, a Republican from South Carolina.
Graham was also seen at the White House on Thursday.
Paramount would face ongoing scrutiny for its deal. The US Senate Judiciary Committee had scheduled a hearing for March 4 to once again examine the Warner Bros sale following a hearing earlier this month.
US Senator Cory Booker once again extended an invitation for Ellison to attend.
US Senator Elizabeth Warren also weighed in on the Paramount deal.
“A Paramount Skydance-Warner Bros merger is an antitrust disaster threatening higher prices and fewer choices for American families,” Warren said in a statement. “A handful of Trump-aligned billionaires are trying to seize control of what you watch and charge you whatever price they want.”
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