Netflix stock surged more than 9% on Friday after investors welcomed the company’s decision to withdraw from the bidding race for Warner Bros Discovery. The move ends months of competition with Paramount Skydance for some of Hollywood’s most valuable studio and streaming assets.
Netflix chose not to match Paramount’s latest $31 per share offer, nor did it increase its previous bid of $27.75 per share for Warner Bros’ studio and streaming operations. The company stated that the transaction was “no longer financially attractive.”
The market responded positively. Netflix shares had fallen more than 18% since announcing its interest in the deal on December 5. Investors viewed the withdrawal as a sign of financial discipline and a commitment to shareholder value.
Ben Barringer, head of technology research at Quilter Cheviot, described the decision as evidence of prudent management. According to Barringer, effective leadership involves evaluating acquisition opportunities carefully, paying a fair price, and avoiding overpayment.
Some analysts had questioned whether Netflix’s bid was defensive — aimed at blocking a potential competitor — or a strategic shift away from its long-standing build-versus-buy model. HSBC analysts described the withdrawal as a positive development, suggesting it allows Netflix to refocus on its core business while rivals navigate regulatory approvals and complex merger integration processes. They also noted that Paramount Skydance may face significant debt burdens following the transaction.
Meanwhile, shares of Paramount, led by CEO David Ellison, rose 5%. A merger with Warner Bros would provide Paramount access to a strong portfolio of intellectual property, including major franchises such as Fantastic Beasts and The Matrix, strengthening its presence across film, television, and streaming.
However, some industry observers expressed skepticism. Ross Benes, senior analyst at Emarketer, pointed out that Warner Bros Discovery still carries debt from its previous merger and faces challenges with declining legacy assets. He suggested that the deal may reflect ambition rather than purely financial logic.
For Paramount’s streaming business, combining its platform with HBO Max and Discovery+ could significantly reshape its competitive position in a market long dominated by Netflix. Analysts note that Paramount has lagged in the streaming wars and may require substantial content and operational strength to compete effectively against Netflix, Disney, and Amazon.
In its revised offer, the Paramount consortium — backed by billionaire Larry Ellison and led by David Ellison — increased its termination fee to $7 billion and expanded financing commitments to $45.7 billion in equity.
Market observers emphasize that every acquisition has a right price. The focus now shifts to Paramount, which must demonstrate that the sizable financial commitment will generate long-term value in an increasingly competitive streaming industry.
