Netflix, Paramount shares jump as months-long fight for Warner Bros ends

Netflix jumped more than 9% premarket on Friday as investors cheered its decision to exit the fight for Warner Bros Discovery, while Paramount rose about 10% on winning the race for some of the world’s most prized TV and film assets.

The end of the months-long bidding war put the focus back on the significant antitrust scrutiny that the Paramount-Warner Bros tie-up would face in the U.S. and Europe, including an active investigation in California. Warner Bros shares were marginally lower.

Paramount Skydance maintained its dogged pursuit of Warner Bros, launching a hostile campaign to wrest the prize from Netflix. It managed to lure Warner Bros back to the bargaining table last week, with a revised $31-a-share bid that topped Netflix’s $27.75 offer for the studio and streaming assets.

Netflix said the price required to stay in the contest had climbed beyond what it considered financially sound, confirming to Reuters that it would withdraw from the takeover battle. “We’ve always been disciplined… the deal is no longer financially attractive,” the company said.

“The bid always looked like a mix of offence and defence – shoring up content and scale, while keeping competition from gaining any edge, but at a very high price,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

“For now, at least, the market seems to be pricing this as a win for everyone.”

In the fight for Warner Bros, the Paramount consortium, backed by billionaire Larry Ellison and led by his son, Paramount CEO David Ellison, also boosted its termination fee to $7 billion and expanded its financing commitments, including $45.7 billion in equity.

“In the U.S., we believe Paramount has a good enough relationship with the presidential administration to ease concerns, and the Department of Justice has set a precedent in overlooking the merger of major studios when Disney bought Fox,” analysts at Morningstar said.