Can Netflix Afford to Walk Away from Warner Bros.?

In a surprise move, Netflix has declined to raise its offer for Warner Bros. Discovery, paving the way for Paramount to acquire the media giant. The decision, announced by Netflix co-CEOs Ged Sarandos and Greg Peters, sent the company's shares soaring nearly 10% in after-hours trading.

According to the statement, Netflix had received notice from Warner Bros. Discovery's board that Paramount Skydance's new bid was considered a "superior proposal." However, after careful consideration, the streaming giant decided not to match the offer, citing that the deal was "no longer financially attractive" at the required price.

"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," the co-CEOs said.

The move marks a significant shift in the bidding war for Warner Bros. Discovery, which had been ongoing for several months. Netflix had initially been considered a frontrunner to acquire the media giant, but Paramount's latest offer appears to have changed the dynamics of the deal.

Paramount's bid, which was deemed "superior" by Warner Bros. Discovery's board, is reportedly higher than Netflix's initial offer. The exact details of the bid were not disclosed, but sources close to the deal suggest that it was significantly higher than Netflix's offer.

The decision to walk away from the deal may come as a surprise to some, given Netflix's aggressive expansion strategy in recent years. However, the company's co-CEOs emphasized that the deal was always a "nice to have" rather than a "must have," and that they would not compromise on price.

"We are disciplined in our approach to M&A, and we will not overpay for assets that do not meet our strategic and financial criteria," the co-CEOs said.

The news is likely to be welcomed by investors, who have been watching the bidding war closely. Netflix's shares have been under pressure in recent months, and the decision to walk away from the deal may be seen as a positive move by the company.

Meanwhile, Paramount is expected to move forward with the acquisition, pending regulatory approval. The deal is expected to be completed in the coming months, although the exact timeline is unclear.

In other news, Netflix has also announced that it will be screening Joey Power's romantic comedy "Love Language" at SXSW. The film, which stars Chloë Grace Moretz and Anthony Ramos, follows an aspiring author who reconnects with her long-time crush, only to learn that he is the fiancé of one of her new clients. The film is expected to generate significant buzz at the festival.

Overall, Netflix's decision to walk away from the Warner Bros. Discovery deal marks a significant shift in the media landscape. While the company may have missed out on a major acquisition, it has demonstrated its commitment to financial discipline and strategic decision-making.