Netflix Withdraws from Warner Bros. Discovery Acquisition, Paving the Way for Paramount’s Takeover
In a significant development within the entertainment industry, Netflix has officially withdrawn its bid to acquire Warner Bros. Discovery (WBD), effectively clearing the path for Paramount Skydance to proceed with its acquisition of the media conglomerate. This decision concludes a high-stakes bidding war that has captivated the sector in recent months.
The Bidding War Unfolds
The competition to acquire WBD began in December 2025 when Netflix announced its intention to purchase the company’s studios and streaming services for approximately $82.7 billion in cash. This move aimed to bolster Netflix’s content library and strengthen its position in the increasingly competitive streaming market.
However, Paramount Skydance, led by CEO David Ellison and financially backed by his father, Oracle co-founder Larry Ellison, entered the fray with a competing offer. Initially, Paramount proposed to acquire the entirety of WBD, including its linear television networks such as CNN, TBS, TNT, Discovery, and HGTV, for $30 per share. This offer valued WBD at around $108 billion.
Paramount’s Enhanced Proposal
On February 24, 2026, Paramount Skydance revised its offer, increasing the bid to $31 per share, thereby valuing WBD at approximately $111 billion. This enhanced proposal included several key components:
– A $7 billion regulatory termination fee payable by Paramount if the transaction failed due to regulatory issues.
– A commitment to cover the $2.8 billion termination fee that WBD would owe Netflix for ending their existing agreement.
– A ticking fee of $0.25 per share per quarter, beginning after September 30, 2026, to compensate WBD shareholders for any delays in closing the deal.
These terms were designed to provide financial assurances and mitigate potential risks associated with the acquisition process.
Netflix’s Decision to Withdraw
Following Paramount’s revised offer, WBD’s Board of Directors determined that the new proposal constituted a Company Superior Proposal as defined in their merger agreement with Netflix. This determination triggered a four-business-day period during which Netflix had the opportunity to match or exceed Paramount’s bid.
On February 26, 2026, Netflix co-CEOs Ted Sarandos and Greg Peters announced that the company would not increase its offer, stating, At the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive. This decision effectively ended Netflix’s pursuit of WBD.
Implications of the Acquisition
With Netflix stepping aside, Paramount Skydance is set to acquire WBD in its entirety. This acquisition encompasses a vast array of assets, including:
– Warner Bros. film and television studios
– HBO and its streaming service
– CNN and other linear television networks
– Various entertainment and gaming divisions
The consolidation of these assets under Paramount’s umbrella is expected to have far-reaching implications for the media landscape. Industry analysts anticipate that the merger will lead to significant restructuring within the combined entity, potentially resulting in job cuts and shifts in content strategy.
Regulatory and Political Considerations
The proposed merger is subject to regulatory approval, and it has already attracted scrutiny from various stakeholders. Concerns have been raised about the potential for reduced competition and the concentration of media ownership. Additionally, political dynamics may influence the regulatory review process, given Larry Ellison’s known support for President Trump and the broader political affiliations of key players involved.
Conclusion
The withdrawal of Netflix from the bidding war for Warner Bros. Discovery marks a pivotal moment in the entertainment industry. As Paramount Skydance moves forward with its acquisition, the sector braces for the transformative changes that this consolidation is likely to bring. The coming months will be critical in determining how this merger reshapes the competitive landscape and influences the future of media consumption.
