“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval,” Sarandos and Peters said in a statement.
“However, we’ve always been disciplined.”
Sarandos had visited the White House earlier on Thursday.
Last December, Warner Bros agreed to a takeover offer from Netflix for some of its assets. But Paramount made a rival offer – and has not backed down – as it looks to transform itself into a Hollywood heavyweight.
Paramount, which is backed by tech billionaire Larry Ellison and led by his son David, previously found itself rebuked by Warner Bros.
In December, the Warner Bros said it had agreed to sell its film and streaming divisions, including HBO, to Netflix in a deal worth $27.75 per share or roughly $82bn (£61bn), including debt.
Warner Bros said it would spin-off the remainder of its business, including traditional television networks and the news channel CNN, as an independent company.
But in a last-ditch push, Paramount this week agreed to pay more for a Warner Bros takeover. The company offered $31 per share in cash, up from $30 per share to take over the entire company.
It also agreed to pay $7bn should the deal fall through and cover the $2.8bn fee Warner Bros had agreed to pay Netflix in the event of a break-up of the merger plan.
If Paramount’s deal is approved by regulators, the company would fold Warner Bros’ HBO Max streaming customers into its portfolio. It would also take ownership of CNN, the Food Network and a range of sports offerings.
Paramount’s traditional networks already include brands such as Nickelodeon, CBS and Comedy Central.
