Paramount wins the bidding war for Warner Bros. Discovery as Netflix drops out

Paramount $PARA Skydance prevailed Thursday in its months-long effort to buy Warner Bros. Discovery, as Netflix $NFLX, the streaming giant that had previously enjoyed the inside track to buy Warner's studio and streaming businesses, walked away from the table.

Netflix, which struck a deal with the company late last year, said Thursday that it had declined to raise its offer for Warner Bros. Discovery. That came after the Warner board had determined that Paramount — which had repeatedly sweetened its offer in a hostile bid to buy all of Warner Bros., not just the streaming and studio businesses — was now offering a "superior proposal."

It amounted to a huge business and political win for Paramount Skydance, its CEO David Ellison, and his father Larry Ellison, the Oracle $ORCL co-founder and one of the richest people in the world, who had backed the deal. Paramount Skydance, which was previously Skydance before it swallowed up Paramount, is now poised to control a huge swath of streaming, studio, and TV assets. Those include CBS, which joined the fold in the Paramount acquisition, and now CNN, part of Warner Bros. Discovery's TV business.

"We are pleased WBD's Board has unanimously affirmed the superior value of our offer, which delivers to WBD shareholders superior value, certainty and speed to closing," David Ellison said in a statement.

The Ellisons have cultivated a close relationship with President Donald Trump, a dynamic that came into focus as Paramount Skydance tried to acquire the owner of CNN, the cable news network loathed by the president. Trump signaled that he would have a say in who bought Warner Bros.

Netflix co-CEOs Ted Sarandos and Greg Peters said the deal they struck with Warner Bros. in December "would have created shareholder value with a clear path to regulatory approval."

"However," they said in a statement, "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."

They added that buying Warner Bros. "was always a 'nice to have' at the right price, not a 'must have' at any price."

Paramount Skydance stock rose 5% in after-hours trading on Thursday. Netflix stock rose 9%, and Warner Bros. stock fell slightly.