Paramount Wins Bidding War for Warner Bros. As Netflix Bows Out

Paramount Skydance has won the high-stakes bidding war to purchase Warner Bros. Discovery, beating out Netflix. The streaming giant had previously secured a purchase agreement from Warner Bros., but walked away from the deal after Paramount submitted a higher offer. The HBO Max owner has now agreed to be acquired by Paramount in a new $110 billion deal expected to close in the third quarter of 2026. Netflix declined to match Paramount’s latest $31-per-share offer, which includes the entirety of Warner Bros. Discovery, including its network TV assets. Warner Bros.’ leadership ultimately concluded that Paramount’s offer was superior to the previously-accepted $27.75-per-share offer from Netflix, which covered WB’s studio and streaming assets, but excluded TV properties such as CNN, Discovery Channel, and HGTV.

The new deal was first discussed publicly during a global town-hall meeting held by Warner Bros. on February 26th. Should the merger go through, Paramount will become a media titan, combining not only two major movie studios, but also two streaming platforms, HBO Max and Paramount+. Paramount already owns CBS, Showtime, MTV, and other major TV properties, but the WB deal would add CNN, TNT, TBS, Discovery Channel, HGTV, Food Network, and more to its network TV portfolio. But as streaming has all but capsized the enormous ship that was linear television, the biggest component of the merger may be intellectual property. According to Paramount, the company will own a film library of over 15,000 titles and popular franchises after the deal goes through.

Although Netflix had a pending deal with Warner Bros., the streaming company declined to match the latest offer from Paramount, which is led by David Ellison, the son of billionaire Larry Ellison. Paramount had been pursuing the acquisition since last autumn, but Warner Bros. Discovery CEO David Zaslav repeatedly disregarded these advances, publicly supporting the Netflix offer instead. Paramount then launched a hostile campaign appealing directly to Warner Bros. shareholders, raising its offer a number of times in order to outbid its competitor. Eventually, Ellison was able to entice Zaslav and the Warner Bros. Discovery Board of Directors by raising the possibility of an improved cash offer, including a massive $7 billion termination fee to be paid to Warner Bros. should the deal fall through because of regulatory obstacles. Paramount also agreed to cover the $2.8 billion termination fee that Warner Bros. owed Netflix for accepting Paramount’s bid despite having a previous agreement with Netflix. Netflix reported in a regulatory filing on Friday, February 27th that it had received the $2.8 billion from Paramount, effectively ending the previous purchase agreement.

According to Emarketer analyst Ross Benes, Netflix is the biggest winner in the ordeal, even though Paramount secured the acquisition of Warner Bros. “Netflix earns a termination fee paid by Paramount,” Benes said in a statement to Reuters. “By driving a bidding war, Netflix raised the price Paramount had to pay, which will ultimately burden Paramount-WBD with more debt.” Warner Bros. currently has significant debt, largely the result of the 2022 merger with Zaslav’s Discovery. That controversial deal resulted in thousands of job losses, as the newly-formed Warner Bros. Discovery company jettisoned a massive amount of programming and shelved numerous large projects in order to achieve immediate cost-savings. “We canceled a lot of movies and a lot of series when we first got here,” Zaslav said. “We canceled a lot of stuff... that we didn’t think was going to be successful.” The deal with Paramount includes $29 billion in debt. According to the LA Times, Paramount will be saddled with more than $60 billion in debt when all is said and done. The result will be further cost-cutting measures, likely to last for years and to have devastating effects on entertainment workers, particularly in the Los Angeles area. Paramount and Warner Bros. said they expect more than $6 billion in “savings” to result from the merger, due to corporate efficiencies and the streamlining of operations. Warner Bros. shareholders are expected to vote on the proposed merger as soon as early spring of 2026.

The cash-strong offer from Paramount will be funded in part by $47 billion in equity from the Ellison Family and RedBird Capital Partners, with an additional $54 billion from Bank of America, Citigroup, and Apollo. Ellison’s well-known political affiliation with the Trump administration has drawn additional scrutiny on a deal that California regulators are already investigating for potential antitrust violations. California State Attorney General Rob Bonta said that the state is preparing a vigorous review of the deal, which has the potential to transform Hollywood to an unprecedented degree. But Paramount’s political connections could help with company get more favorable treatment, at least at the federal level. The company also expects to win European Union antitrust approval, according to a report from Reuters. Despite Paramount’s favor with the Trump administration, lawmakers on both sides of the aisle remain concerned that the acquisition of Warner Bros. could result in higher prices and fewer choices for consumers. Similar apprehensions are shared throughout the entertainment industry, from theater operators who fear the loss of jobs and a reduction in the number of movies released in theaters, to writers worried about the effects of a media monopoly. “The loss of competition would be a disaster for writers, consumers, and the entire entertainment industry. This merger must be blocked,” the Writers Guild of America said in a statement. The union represents thousands of television and film writers, in addition to workers in news, radio, and online media.

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 co-CEOs Ted Sarandos and Greg Peters

Netflix is a great company and throughout this process… everyone there (has) 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.

— Warner Bros. Discovery CEO David Zaslav

It is clear that Paramount was willing to pay more for Warner Bros. than Netflix was, and this greater determination on Paramount’s part may be a reflection of the company’s rocky financial footing. As Netflix’s co-CEO’s said above, Netflix doesn’t need Warner Bros. as badly as Paramount does. Paramount’s core television business has shrunk significantly in recent years, and its movie studio lost money last year. The company just reported a $339 million operating loss in last year’s fourth quarter, caused in part by restructuring costs due to Paramount’s takeover by Skydance Media. But why exactly is Paramount so desperate to acquire Warner Bros. Discovery, which last week released its own financial results including a reported a $252 million quarterly loss? There are two major reasons. First is the HBO Max and Discovery+ streaming division, which reported growth last quarter even within the context of a bleak period for the company as a whole. By combining the existing Paramount+ streaming service with HBO Max, Paramount would be in a position to compete with streaming giants like Netflix, Amazon, and Disney/Hulu. The second reason is that Warner Bros. Discovery’s intellectual property assets are hugely valuable and will continue to be valuable on an ongoing basis. Paramount Skydance isn’t just buying a movie studio and a streaming service, but a vast library of film and TV franchises, including Harry Potter, The Lord of the Rings, Batman/Superman/DC Comics, Game Of Thrones, and countless others. Warner’s animation portfolio includes the Looney Tunes and Hanna-Barbera characters. The company also owns The Bachelor and its spinoff assets, every permutation of which remains a low-cost, high-reward investment. Even Warner Bros. Discovery’s trove of classic films could be considered wise investments; the company owns everything from The Wizard of Oz and Casablanca to 2001: A Space Odyssey, Goodfellas, and The Matrix.

Paramount has promised to maintain both its own studio and the legendary Warner Bros. studio, pledging to produce at least 30 theatrical films each year. In 2025, the company released only eight. Meanwhile, Warner Bros. released a string of box-office hits, including Sinners and A Minecraft Movie, generating $4.4 billion in theatrical revenue last year alone. “Our goal for Warner Bros. Discovery has been to make this great company the most innovative and exciting place to tell stories in the world,” Zaslav said on last week’s earnings call. “Looking at 2025, it’s clear we fulfilled our ambition.” After months of favoring the Netflix deal and publicly rejecting Paramount’s direct overtures, Zaslav told staffers during Friday’s town-hall meeting that he is confident about the deal with Paramount. “Together, we can be a great company,” he said.