Wall Street historians will tell you that hostile takeovers rarely work when a competing bidder is knee deep in formal negotiations to acquire an asset. That was the prevailing thinking when Warner Bros. Discovery entered exclusive negotiations with Netflix on Dec 4, 2025. Less than three months later, Netflix bowed out of the deal after an increased offer of $31 a share from Paramount was deemed “superior” by the Warner Bros. Board.
In a statement, Netflix noted, “Netflix, Inc. today announced that it has declined to raise its offer for Warner Bros. Netflix had earlier received notice from Warner Bros. Discovery (WBD) that its Board of Directors has determined Paramount Skydance’s (PSKY) latest proposal constitutes a “Superior Proposal” under the terms of WBD’s existing merger agreement with Netflix.“
Co-CEOs Ted Sarandos and Greg Peters added, “The transaction we negotiated would have created shareholder value with a clear path to regulatory approval. 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, so we are declining to match the Paramount Skydance bid. Warner Bros. is a world-class organization, and we want to thank David Zaslav, Gunnar Wiedenfels, Bruce Campbell, Brad Singer, and the WBD Board for running a fair and rigorous process. We believe we would have been strong stewards of Warner Bros.’ iconic brands, and that our deal would have strengthened the entertainment industry and preserved and created more production jobs in the U.S. But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price. Netflix’s business is healthy, strong, and growing organically, powered by our slate and best-in-class streaming service. This year, we’ll invest approximately $20 billion in quality films and series and will expand our entertaining offering. Consistent with our capital allocation policy, we’ll also resume our share repurchase program. We will continue to do what we’ve done for more than 20 years as a public company: delight our members, profitably grow our business, and drive long-term shareholder value.“
In a separate statement, Warner Bros Discovery CEO David Zaslav remarked, “Netflix is a great company and throughout this process, Ted, Greg, Spence, and everyone there have been extraordinary partners to us. We wish them well in the future. Once our Board votes to adopt the Paramount merger agreement, it will create tremendous value for our shareholders. We are excited about the potential of a combined Paramount Skydance and Warner Bros. Discovery and can’t wait to get started working together telling the stories that move the world.”
Netflix initially won a three-race bidding war between Paramount, Comcast, and the streamer with an $82 million bid for just the studios and streamer portion of the business. For a $27.2 million shareprice -$72 billion – and taking on $10 billion in debt, Netflix would have gained control of the historic Burbank lot, Warner Bros. Pictures, HBO, HBO Max, and Warner Bros. Television. The rest of WBD’s cable assets, including CNN, TNT, TBS, and the Discovery networks, would have been spun off into a separate company still controlled by current WBD shareholders.
Netflix will receive a $2.8 billion breakup fee after the WBD Board went in a different direction.
Paramount’s bids have always been for the entire company, and they have argued their $30 a share bid was worth more than the Netflix deal and spin-off plan. David Ellison and Paramount have spent the past three months blasting the Netflix deal in the press, recruiting activist investors to stop the sale, and lobbying the current administration, Republican lawmakers, and the Department of Justice as well. This week, Ellison sat as a guest of President Trump at the State of the Union.
Ellison has touted $6 billion in cost savings that will come from thousands of layoffs. He has already enacted over 3,000 job layoffs after the Skydance and Paramount mergers worldwide. Unlike Netflix and WBD, there is a massive overlap between Paramount and WBD across the board. From theatrical marketing, distribution, and studio operations to Paramount Television and Warner Bros. Television, to cable network distribution and more.
Barring any move to sell it or spin it off with other cable networks, the deal will put the Ellisons in control of CNN. Trump has long rallied against the cable news network, and many suspect Ellison will appease the president with changes at the news network after he gutted CBS News with the hiring of Bari Weiss as editor-in-chief.
Warner Bros. Discovery warned stockholders earlier this month that there could be a talent exodus if Paramount acquired the company. Whether Warner Pictures CEOs Pam Abdy and Michael De Luca and HBO topper Casey Bloys decide to remain at the combined company remains to be seen.
The new deal still needs to meet regulatory approval.
Follow Gregory Ellwood on Bluesky
Follow Gregory Ellwood on Threads
Follow Gregory Ellwood on Instagram
Sign Up For The Breakdown Newsletter
