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Netflix has decided not to buy Warner Bros. Discovery’s studio and streaming business, clearing the way for Paramount to take over
Warner Bros
Paramount Skydance has emerged as the frontrunner in the months-long battle to acquire Warner Bros Discovery after streaming giant Netflix declined to raise its offer for the Hollywood studio.
In a statement, Netflix said it would not match Paramount Skydance’s latest bid, citing financial discipline. “We’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive,” the company said. Netflix confirmed to Reuters that it was walking away from the bidding process.
Warner Bros’ board must still formally terminate its agreement with Netflix and approve Paramount Skydance’s proposal. Chief Executive David Zaslav said adopting the Paramount merger agreement would create significant shareholder value and expressed optimism about the combined company’s prospects.
Earlier on Thursday, Warner Bros said Paramount’s revised offer of $31 per share topped Netflix’s $27.75-per-share bid for its streaming and studio assets. Paramount had intensified its pursuit in recent weeks, including a hostile campaign and a sweetened cash proposal that brought Warner back to the negotiating table.
A Netflix adviser, speaking anonymously, told Reuters the company chose to exit because the economics no longer made sense. Co-CEO Ted Sarandos had previously signalled restraint in raising the bid, stressing the company’s disciplined approach to acquisitions. The adviser said Netflix was effectively bidding against billionaire Larry Ellison, father of Paramount CEO David Ellison, who appeared willing to pay a price Netflix considered excessive.
Netflix shares surged more than 10% after news it would not increase its offer.
Regulatory concerns loom
A merger between Paramount and Warner Bros would combine two major film studios, streaming platforms HBO Max and Paramount+, and news operations including CNN and CBS.
The deal is expected to face antitrust scrutiny in Washington, several U.S. states and overseas. Analysts at TD Cowen said federal approval appears likely given the current political climate, but state-level challenges — particularly from California — and potential European regulatory reviews remain possible.
California Attorney General Rob Bonta said the deal has not cleared regulatory review and confirmed that the state’s Department of Justice has an open investigation. Democratic Senators Elizabeth Warren, Bernie Sanders and Richard Blumenthal have also raised concerns that political considerations could influence approval.
Under its revised proposal, Paramount increased the termination fee payable if the deal fails regulatory approval to $7 billion from $5.8 billion. It also agreed to cover the $2.8 billion breakup fee Warner Bros would owe Netflix.
The Ellison Trust is committing $45.7 billion in equity financing, backed by Larry Ellison, alongside additional funding to meet solvency requirements. Debt financing of $57.5 billion will be provided by Bank of America Merrill Lynch, Citi and Apollo, up from an earlier $54 billion commitment.
Activist investor Ancora Holdings, which owns a small stake in Warner Bros, welcomed Netflix’s withdrawal, saying it clears the way for shareholders to receive more cash and improves the likelihood of regulatory approval.
The outcome marks a dramatic turn in one of Hollywood’s most closely watched takeover battles, with Paramount Skydance now poised to secure control of Warner Bros, subject to board and regulatory approvals.
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February 27, 2026, 07:50 IST
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