Netflix has officially backed out of its proposed acquisition of Warner Bros. Discovery, following heightened competition from Paramount Global and its partner Skydance.
The decision, confirmed in a joint statement by Netflix co‑CEOs Ted Sarandos and Greg Peters, marks a turning point in a prolonged bidding war over Warner Bros.’ storied assets and leaves Paramount poised to emerge as the victor.
The development has major implications for the global entertainment landscape, media consolidation trends, and the future of streaming.
Netflix formally announced on February 26, 2026, that it will not raise its existing offer to acquire Warner Bros. Discovery, a deal initially valued at roughly $83 billion for the company’s studios and streaming businesses.
In its statement, Netflix said the deal was “no longer financially attractive” at the price required to match a superior bid from Paramount Skydance.
“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval,” Netflix said.
“However, we’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive.”
By declining to increase its bid, Netflix has ceded ground to Paramount in the battle to acquire Warner Bros., which encompasses television studios, film production, and streaming platforms such as HBO and HBO Max.
Paramount Skydance’s offer — valued at approximately $111 billion including debt — was deemed a “Company Superior Proposal” by the Warner Bros. Discovery board of directors. The offer includes $31 per share in cash, a ticking fee that increases payouts the longer the deal takes to close, and substantial financial backstops.
The Paramount package also covers financial obligations that Warner would owe Netflix if the original deal were terminated, including a $2.8 billion breakup fee, while incorporating a $7 billion regulatory termination fee if the acquisition fails due to regulatory challenges.
Larry Ellison and his associated trust have committed additional equity to support the deal’s financing.
These terms, combined with a higher per‑share price and regulatory assurances, persuaded the board that Paramount’s proposal delivers better value for shareholders and accelerates the path to closing.
Netflix’s share price rose sharply after the announcement, with gains of over 8 % in after‑hours trading, suggesting investor approval of the company’s decision to preserve financial discipline rather than overpay.
Paramount’s stock also enjoyed upward movement in response to its stronger position in the acquisition race.
Netflix also reaffirmed its operational strategy, signaling that it will continue to focus on organic growth, content investment (with plans to spend around $20 billion on films and series in 2026), and shareholder returns through a resumed share repurchase program.
Stepping away from the Warner Bros. deal is a strategic retreat that allows Netflix to avoid taking on significant assumed debt and integration risk.
Although acquiring Warner Bros. would have strengthened Netflix’s content library and competitive positioning, the increased financial burden posed by Paramount’s bid raised concerns among Netflix leadership about long‑term shareholder value.
If the Paramount takeover proceeds, it will create one of the most powerful media conglomerates in the world. Paramount already owns a large portfolio of content and channels, including CBS, MTV, Nickelodeon and its own streaming service and now stands on the brink of adding Warner Bros., HBO, CNN and other major brands.
However, the deal faces intense regulatory scrutiny. U.S. and international authorities are expected to closely examine the transaction for antitrust concerns, especially given the size of the combined entity and its influence over entertainment content and distribution.
California’s Attorney General has already signaled ongoing examination of potential competition issues and economic impacts.
While Netflix’s exit from the bidding war appears definitive, the Paramount takeover is not yet finalized.
The new offer must pass regulatory approval and satisfy shareholder voting processes, which could take many months.
If regulators impose conditions or block the deal outright, the landscape could change again.