Netflix has withdrawn from the bidding war for Warner Bros. Discovery, clearing the way for Paramount Skydance to secure a $111 billion deal for the Hollywood studio.

Netflix confirmed it would not match Paramount’s latest offer, stating that the price required to remain competitive was no longer financially attractive. The streaming giant had previously agreed to acquire Warner Bros.’ studio and streaming businesses in an $82.7 billion transaction, including assumed debt, in December.

However, Paramount reopened the contest with a broader offer for the entire company, ultimately persuading Warner Bros. that its revised proposal — valued at $31 per share — represented a superior bid.

Markets reacted positively to Netflix’s decision to step aside. Shares in the company rose sharply in after-hours trading, reflecting investor approval of its decision not to stretch its balance sheet. Warner Bros. shares declined as expectations of a prolonged bidding war faded, while Paramount’s stock remained broadly stable.

The outcome marks a significant consolidation moment in the global media and entertainment sector. Netflix, which has built a profitable global streaming platform with more than 325 million subscribers, has traditionally relied on organic growth and selective content investments rather than large-scale acquisitions.

Legacy studios such as Paramount and Warner Bros. have faced mounting pressure as traditional cable networks lose viewers and advertising revenue, while their streaming services compete with larger platforms.

Paramount’s bid includes Warner Bros.’ cable television assets such as CNN and TNT, expanding its reach across both streaming and broadcast. The company, led by David Ellison, strengthened its offer after earlier rejections, including providing substantial equity backing and regulatory assurances.

As part of the revised proposal, Paramount committed to covering $2.8 billion in termination costs owed to Netflix and pledged an additional $7 billion break fee should the transaction fail to secure regulatory approval.

The decision brings an end to one of the most closely watched takeover battles in the media industry, reshaping ownership of some of Hollywood’s most recognisable film and television assets.