Netflix Stock Up Nearly 10% After Ditching Warner Bros. Discovery Deal

Wall Street seems thrilled that Netflix is walking away from its deal to buy Warner Bros. Discovery.

Shares of the streaming giant were up nearly 10% in after-hours trading, at more than $92, after Netflix declined to increase its offer for the film and media giant after the company’s board declared Paramount Skydance’s new bid was a “superior proposal.” Netflix’s stock had closed Thursday at $84.59.

In December, Netflix outmaneuvered Paramount to secure a deal to buy Warner Bros. Discovery’s studio and streaming businesses for $27.75 per share. This week, Paramount sweetened its offer to buy all of Warner Bros. Discovery, including its struggling cable business, increasing it from $30 per share to $31 per share.

Warner Bros. controls the rights to the DC Comics library of superheroes, “Harry Potter” film and television rights, as well as HBO, still the preeminent brand in television. However, investors had been skeptical about the wisdom of Netflix’s plans to buy the studio and its streaming arm, both because of its high cost and because it involved getting into areas like theatrical distribution that wasn’t part of its core business. Shares of Netflix have fallen sharply since it announced the deal.

“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval,” Netflix co-CEOs Ted Sarandos and Greg Peters said in a joint statement. “However, 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.”

Netflix’s chiefs added, “This transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”