ShareSaveDanielle Kaye,Business reporterandNardine Saad,Los Angeles, California ShareSaveGetty ImagesNetflix has backed away from its proposal to buy Warner Bros Discovery, clearing the way for Paramount Skydance to win a months-long battle for one of Hollywood's most storied studios.
Warner Bros, which put itself up for sale last year, on Thursday said Paramount's latest bid was "superior" to the one from Netflix, which in turn refused to raise its offer.
Netflix executives said they have declined to match Paramount Skydance's bid as "the deal is no longer financially attractive" at that price.
The winner of the bidding war would gain control of the iconic studio along with its films and media networks - a takeover that could significantly reshape the media landscape.
Paramount had boosted its offer days ago, agreeing to increase its purchase proposal by $1 per share.
"The transaction we negotiated would have created shareholder value with a clear path to regulatory approval," Netflix co-chief executives Ted Sarandos and Greg Peters said in a statement. "However, we've always been disciplined."
"This transaction was always a 'nice to have' at the right price, not a 'must have' at any price," the Netflix executives added.
The announcement came just hours after Sarandos had visited the White House on Thursday.
It caps off a dramatic months-long saga that - if approved by regulators - is likely to reshape Hollywood.
But California Attorney General Rob Bonta said later on Thursday that the potential merger "is not a done deal."
"These two Hollywood titans have not cleared regulatory scrutiny - the California Department of Justice has an open investigation, and we intend to be vigorous in our review," he wrote in a social media post.
Bonta had said earlier this month that his office would review any deal involving Warner Bros as the entertainment industry represents a "critical sector" for California's economy.
Paramount would also need approval from the US Department of Justice as well as European regulators.
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A deal between Paramount and Warner Bros could hold serious ramifications for the future of one of the US's biggest news brands - CNN.
Trump has frequently attacked the news network over its reporting of his policies. He said in December that he believed CNN should be sold as part of any Warner Bros deal. He called the people running CNN "corrupt or incompetent" and said they should not be entrusted to run the network.
CNN head Mark Thompson sent an email to employees as news spread of the all-but-assured deal, telling workers to not "jump to conclusions about the future until we know more", US media reported.
The BBC has contacted CNN for comment.
Last December, Warner Bros agreed to a takeover offer from Netflix for some of its assets. But Paramount, which is backed by tech billionaire Larry Ellison and led by his son David, made a rival offer as it looks to transform itself into a Hollywood heavyweight. But it had been rebuffed by Warner Bros.
The funding of Paramount's offer has drawn scrutiny, in part over the close ties between Trump and Larry Ellison, a major Republican donor.
Paramount's initial hostile bid was also supported by Trump's son-in-law and adviser Jared Kushner through his investment firm, raising concerns about the president's influence over the deal.
Kushner's firm, Affinity Partners, backed away in December amid scrutiny over the deal.
Paramount's 2025 merger with Skydance also led to scrutiny amid negotiations with the Trump administration's Federal Communications Commission, which had to sign off on the deal.
Among the concessions made was Paramount's $16m settlement on behalf of CBS News. Trump had sued the network over a "60 Minutes" interview with former vice president Kamala Harris, claiming that the network had engaged in election interference in the way the program was edited.
