Wall Street seems excited about Netflix pulling out of its deal to buy Warner Bros. Discovery.
The streaming giant’s shares rose nearly 10% in after-hours trading to more than $92 after Netflix rejected an increase in its offer for the film and media giant after the company’s board declared Paramount Skydance’s new bid an “excellent offer.” Netflix stock closed Thursday at $84.59.
In December, Netflix outbid Paramount and won a deal to buy Warner Bros. Discovery’s studio and streaming businesses for $27.75 per share. Paramount this week accepted an offer to buy all of Warner Bros. Discovery, including its struggling cable business, increasing the price from $30 per share to $31 per share.
Warner Bros. controls the rights to the DC Comics library of superheroes, the film and television rights to Harry Potter, and HBO, which remains the preeminent brand in the television industry. But investors were skeptical about the wisdom of Netflix’s plans to acquire its studio and streaming divisions, both because of their high costs and because they involved entering areas outside of its core business, such as theatrical distribution. Netflix’s stock price has plummeted since announcing the deal.
“The transaction we have negotiated would have created shareholder value had there been a clear path to regulatory approval,” Netflix co-CEOs Ted Sarandos and Greg Peters said in a joint statement. “However, we remain disciplined and decline to match Paramount Skydance’s bid as this transaction is no longer financially attractive at the price required to match Paramount Skydance’s latest offer.”
Netflix executives added: “This transaction has always been a ‘nice-to-have’ at the right price, not a ‘must-have’ at any price.”
