Netflix has officially stepped back from one of the most dramatic bidding wars in Hollywood history, declining to raise its offer for Warner Bros. Discovery after the media giant’s board declared a rival proposal from Paramount Skydance “superior.”
The decision, announced on 27th February 2026, hands David Ellison’s Paramount Skydance a clear runway to absorb CNN, HBO, Warner Bros. Pictures, and a catalogue of some of the most iconic intellectual property in the world – a deal now valued at approximately USD 111 billion (around AUD 172 billion).
Why Netflix Stepped Back
The Netflix Warner Bros bid, first struck in December 2025, was valued at roughly USD 83 billion. It covered only the streaming and studio assets – HBO Max, Warner Bros. Pictures, and DC Studios – while leaving out the cable network portfolio.
Paramount came in harder. Its revised all-cash offer lifted the per-share price to USD 31, up from USD 30, pushing the total enterprise value to around USD 111 billion when including Warner Bros. Discovery’s existing debt load.
Netflix co-CEOs Ted Sarandos and Greg Peters confirmed their position in a statement: “This transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
The streaming giant cited financial discipline as the reason it chose not to match Paramount’s offer.
“The deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid,” Netflix said.
Warner Bros. Discovery’s flagship studio lot in Burbank, California – the centrepiece of a landmark takeover battle. [Warner Bros. Studio Operations]
Paramount’s Long Road to Victory
This outcome was anything but straightforward. Warner Bros. Discovery’s board had repeatedly rebuffed Paramount’s advances throughout late 2025, publicly questioning the company’s financial credibility. When the WBD board signed a deal with Netflix instead, Paramount launched a hostile takeover bid, appealing directly to shareholders.
That persistence eventually paid off.
Paramount’s revised all-cash offer to buy the entire company qualifies as a “company superior proposal” under the terms of Warner Bros. Discovery’s merger agreement with Netflix, the WBD board confirmed.
The sweetened Paramount bid also came with a USD 7 billion reverse termination fee in the event regulators block the transaction – a significant safety net that Netflix’s proposal did not match.
Paramount also agreed to pay Warner Bros. Discovery’s multibillion-dollar breakup fee owed to Netflix if that agreement is terminated, as well as a “ticking fee” tied to any delays in closing.
What the Combined Empire Looks Like
If the deal clears regulators, the merged Paramount-Warner Bros. Discovery entity would be a behemoth. Think:
- Streaming: Paramount+ merged with HBO Max
- Film studios: Warner Bros. Pictures, combined with Paramount Skydance Studios
- News: CNN and CBS News under one roof
- Cable: TNT, TBS, HGTV, Discovery Channel, and more
A combined Paramount-WBD would bring together two of the five largest movie studios by revenue, while also putting CNN and CBS News under one ownership structure.
The scale rivals Disney and Comcast’s NBCUniversal. It would be a media colossus spanning theatrical film, broadcast television, cable, and streaming.
Paramount Skydance CEO David Ellison has secured a path to one of the biggest media mergers in Hollywood history [Wikipedia]
Markets React: Netflix Up, WBD Down
Investors responded swiftly.
Netflix stock spiked 10% in extended trading after announcing its withdrawal, while Paramount stock gained 5%. Shares of Warner Bros. Discovery fell 2%.
The Netflix share rally reflects a market that had grown increasingly uncomfortable with the idea of the world’s biggest streamer absorbing a traditional Hollywood studio laden with legacy debt and cable obligations.
The Political Dimension
This deal did not play out in a vacuum. U.S. President Donald Trump had publicly commented on the bidding war multiple times, sending mixed signals but indicating at various points a preference for Paramount over Netflix.
Trump had previously praised Netflix co-CEO Ted Sarandos as a “fantastic man,” but also sent mixed messages about the mega-merger and expressed anger over comments made by former Obama official and Netflix board member Susan Rice.
Sarandos was at the White House on the day Netflix announced its withdrawal, meeting with senior staff. He did not meet with the President directly.
The Netflix deal was also facing increased regulatory scrutiny from a group of Trump-aligned attorneys general. A Paramount Skydance-Warner Bros. Discovery merger is likely to have an easier path to approval, given the Ellison family’s close ties to the Trump administration.
Also Read: Jack Dorsey Just Cut Half of Block’s Staff. Wall Street Loved Every Bit of It.
What Happens Next
The WBD board will now move to formally adopt the Paramount merger agreement. A shareholder vote, originally scheduled for 20th March 2026, will likely be updated.
The deal is expected to close between September 30th and December 31st, 2026, pending regulatory approval in the United States and a parallel review by European Union antitrust regulators.
The European Union’s antitrust regulators are expected to scrutinise the Paramount bid for WBD, with both bidders having already held preliminary discussions with the EU’s merger watchdog.
As for Netflix, the company walks away from the deal with its balance sheet intact and no new legacy liabilities. What it does next – whether it pursues other acquisitions or doubles down on original content – will be one of the most watched strategic questions in the entertainment industry over the coming months.
