Business

Netflix walks away from $83B Warner takeover

Netflix, facing dismal odds in Washington and an increasingly restive shareholder base, walked away from its deal for Warner Bros. Discovery Thursday.

The company said it wouldn’t match the $111 billion offered by Paramount, clearing the way for David Ellison to take over a storied movie studio in Warner Bros., a dominant but controversial news channel in CNN, and a rich content library that includes Harry Potter and Batman. 

“This transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price,” Netflix co-CEOs Ted Sarandos and Greg Peters said in a statement.

As consolation, Netflix will pocket a $2.8 billion breakup fee from Warner Bros.

But having swung and missed at its first big M&A deal, and suggested that it needed something beyond the streaming reach and global content it produces and licenses from studios, it now has to reassure investors that its business is fine.

It has also learned a bruising lesson about dealmaking in President Donald Trump’s Washington. Sarandos seemed to have contained the administration’s preference for Paramount, which owns Bari Weiss’s right-leaning The Free Press and has been pushing CBS News rightward since buying it in October.

That lasted until a week ago, when Netflix board member Susan Rice criticized companies which “take the knee” to Trump. The president responded by calling for Netflix to fire her, which seemed to lengthen the odds that his Justice Department would approve a deal that some Republicans in Congress had already been criticizing as anti-competitive.

The company will now have to answer investor concerns about what it does next and contend with an infuriated president who will likely continue to pay attention to the cultural programming Netflix puts out.