Netflix withdraws Warner Bros bid: 'No longer financially attractive'

Netflix is no longer in discussions to buy Warner Bros. Discovery following a bidding war against Paramount.

In a letter to shareholders on Thursday, Feb. 26, the streaming giant announced it declined to raise its last offer and will be exiting the race to own the Hollywood movie studio following Paramount Skydance's takeover. "The transaction we negotiated would have created shareholder value with a clear path to regulatory approval," Netflix CEOs Ted Sarandos and Greg Peters said in a joint statement.

"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," the statement continued.

Netflix offered to purchase $27.75 a share for the company's HBO, HBO Max and the Warner Bros. film and television studios in Burbank.

Paramount's last offer on Monday, Feb. 23, was $31 a share in cash for HBO, the Burbank studios, and its cable television channels, including CNN and HGTV. Paramount also offered $45.7 billion in equity personally guaranteed by Oracle's billionaire co-founder, Larry Ellison.

Given four days to offer a counteroffer, Netflix ultimately decided to bow out. Sarandos and Peters thanked Warner Bros CEO David Zaslav and other executives for "running a fair and rigorous process."

"We believe we would have been strong stewards of Warner Bros.' iconic brands, and that our deal would have strengthened the entertainment industry and preserved and created more production jobs in the U.S. But this transaction was always a 'nice to have' at the right price, not a 'must have' at any price," the statement continues.

Sarandos and Peters vowed to continue to "delight our members, profitably grow our business, and drive long-term shareholder value."

Initial Netflix offer prompted antitrust concerns, political pushback

Netflix's initial agreement to purchase Warner Bros. Discovery's TV and film studios and streaming division for $72 billion led to political pushback and antitrust concerns.

Sen. Mike Lee, a Republican from Utah who leads the antitrust subcommittee, said on Dec. 3 the purchase "should send alarm to antitrust enforcers around the world," while Democrats like Sen. Elizabeth Warren called the deal "an anti-monopoly nightmare."

Netflix had argued that the deal would create jobs and give its 300 million subscribers more content for less by removing competition between HBO Max and Netflix.

"And when they have Warner Brothers... that share goes up a lot," President Donald Trump told reporters in Washington D.C. on Dec. 7 "That's going to be for some economists to tell... But it is a big market share. There's no question it could be a problem."

Why Paramount wants Warner Bros more than Netflix

Derek Reisfield, a consultant on media and tech mergers and the founder of Marketwatch, told USA TODAY on Thursday, Feb. 26, that Paramount was willing to pay a "nosebleed price" because the company truly felt it needed it more than Netflix.

Reisfield said that owning Warner Bros. will help Paramount's progress across multiple strategic efforts, including expanding content, international distribution, subscriber data and advertising.

"It solidifies Paramount's position as a number 2 or 3 player, along with Disney. In the long run this was a great strategic move for Paramount. Of course, now they have to execute," Reisfield continued. "The cost just got too high for Netflix and the regulatory scrutiny was probably a factor."

Contributing: Thao Nguyen, USA TODAY