Netflix Stock Jumps Nearly 10% After Walking Away From Warner Bros. Discovery Deal
Netflix Stock jumped nearly 10% in after-hours trading after the streaming company declined to increase its bid for Warner Bros. Discovery, a move that followed the target company's board declaring Paramount Skydance's revised offer a "superior proposal. " The stock climbed to more than $92 after the decision, up from a close of $84. 59 on Thursday.
Netflix Stock reaction: market jump and recent slide
The immediate market response was strong: shares rose nearly 10% in after-hours trading to above $92. That rally follows a period in which shares had fallen sharply since the company first announced its purchase plans, driving investor skepticism about the original deal's strategic and financial wisdom.
Why Netflix walked away from the Warner Bros. Discovery deal
Executives said the company declined to increase its offer after Warner Bros. Discovery's board called Paramount Skydance's new bid a superior proposal. Leadership framed the original transaction as one that would have created shareholder value with a clear path to regulatory approval, but flagged price as the decisive factor. Company chiefs said matching the latest offer would have been financially unattractive, and characterized the opportunity as desirable only at the right price, not at any price.
Paramount Skydance bid and price escalation
The competing bid from Paramount Skydance was sweetened this week: the offer for all of Warner Bros. Discovery, including its struggling cable business, was raised from $30 per share to $31 per share. That increase followed an earlier December agreement in which Netflix had outmaneuvered Paramount to secure a deal to buy Warner Bros. Discovery's studio and streaming businesses at $27. 75 per share.
What Warner Bros. Discovery brings to the table
Warner Bros. controls a significant collection of intellectual property and brands that underpinned the bids. Those assets include the DC Comics library of superheroes, the film and television rights to the "Harry Potter" franchise, and HBO, which remains described as the preeminent brand in television. Paramount Skydance's upgraded bid for the entire company explicitly targeted these combined assets, as well as Warner Bros. Discovery's cable operations.
Investor concerns about strategic fit and costs
Investors had expressed skepticism about Netflix's plan to acquire the studio and streaming arm, citing the high cost and the strategic shift required to enter areas such as theatrical distribution—an area described as outside the company's core business. Those doubts contributed to the earlier decline in shares after the initial deal was announced.
Leadership statements and final rationale
Netflix co-CEOs Ted Sarandos and Greg Peters described the negotiated transaction as one that would have created shareholder value and been able to navigate regulatory review, but said that matching Paramount Skydance's latest offer made the deal unattractive financially. The executives emphasized discipline in valuation, adding that the acquisition was "always a 'nice to have' at the right price, not a 'must have' at any price. "
With the company stepping back from the match, the market marked its approval in the form of a nearly 10% after-hours gain. How the situation evolves will depend on whether the competing bidder proceeds to close on the broader offer for Warner Bros. Discovery and on any further responses from investors and other bidders.
