Warner Bros. Discovery, Paramount Skydance, Netflix’s |Public domain; CC BY-SA 3.0

Shares of Paramount Skydance jumped 10.04% Thursday after the company pulled off a dramatic comeback to win control of Warner Bros. Discovery (WBD), defeating Netflix in a high-stakes bidding war. 

Netflix shares rose 2.29% after executives said they would not match Paramount’s final offer.

Netflix walks away
After months of drama, the finale unfolded quickly. WBD deemed Paramount Skydance’s hostile offer superior to its Netflix deal, giving Netflix four days to respond. Within hours, Netflix bowed out, sealing Paramount’s win.

Warner’s board chose Paramount’s improved $31-per-share bid for the entire company, which values it at approximately $111 billion, including WBD’s $33 billion in debt.

Netflix had previously agreed to pay $27.75 per share for Warner’s movie and television studios and the HBO Max streaming service. The streamer’s proposed purchase was worth nearly $83 billion.

Netflix executives said matching Paramount’s higher price no longer made financial sense. Netflix’s Ted Sarandos and his co-CEO Greg Peters stressed that the deal was “always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”

Netflix has lost more than $170 billion in market value since September, when it first emerged as a potential buyer, amid investor concerns about costs and regulatory hurdles.

Paramount sweetens the deal
The company strengthened its proposal with a $7 billion termination fee if regulators block the agreement, and would cover Warner’s $2.8 billion breakup fee owed to Netflix. 

It also moved up a 25-cent quarterly ticking fee for shareholders to start after September 30. Paramount aims to extract $6 billion in cost synergies.

Industry shakeup
If approved, Paramount will add Warner Bros., HBO, CNN, TNT, and TBS to its portfolio, combining two major Hollywood studios under one roof.

The new entity will also control two major news networks and two streaming platforms.

Regulators are expected to scrutinize the merger closely as media giants consolidate to compete in a rapidly evolving streaming market.