Los Angeles, Feb. 26, 2026 (Breaking News) – Netflix Inc. has officially bowed out of the fight for Warner Bros. Discovery Inc. (WBD), saying it will not counter Paramount Skydance’s sweetened $108.4 billion all-cash bid for the Hollywood studio. WBD’s board of directors, after consulting with advisors, unanimously deemed Paramount’s revised $31-per-share offer a “Superior Proposal” under its merger agreement with Netflix. Netflix’s decision not to match effectively ends the streaming giant’s pursuit of WBD’s storied film and streaming assets, clearing a path for Paramount to clinch the takeover.
Netflix Backs Down
Netflix announced Thursday that it “will not raise” its offer for WBD, citing financial discipline in the face of Paramount’s richer bid. “We’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive,” Netflix’s co-chief executives Ted Sarandos and Greg Peters said in a statement. The move likely terminates Netflix’s earlier agreement (worth about $82.7 billion including debt) to acquire WBD’s studio and HBO streaming businesses.
Under the merger contract’s terms, WBD will now pay Netflix a $2.8 billion breakup fee for walking away – a cost that Paramount has agreed to cover in full. Netflix will pocket that termination payment, a silver-lining consolation for being outbid. Investors appeared relieved by Netflix’s restraint: Netflix shares jumped nearly 10% in after-hours trading on the news, reflecting optimism that the company avoided overpaying. WBD’s stock, which had run up on takeover speculation, edged lower by about 1–2%, as shareholders adjusted to the end of the bidding war and the likelihood of Paramount’s deal closing at $31 per share. Paramount’s own stock ticked higher, rising roughly 5% after the rival dropped out.
Paramount’s Superior All-Cash Bid
Paramount Skydance Corp., led by CEO David Ellison, has mounted a tenacious campaign to acquire WBD and is now poised to prevail. The $108.4 billion bid ($31.00 per share) is all-cash and covers the entire company, including WBD’s film and TV studios, the HBO Max streaming service, and a portfolio of cable networks like CNN and TNT. In contrast, Netflix’s rejected offer (about $27.75 per share) was a mix of cash and stock and excluded WBD’s legacy cable channels, which would have been spun off separately. WBD’s board initially sided with Netflix’s proposal last year, but Paramount’s persistence – through multiple sweetened offers and a hostile tender bid – has now yielded a “superior value” deal for shareholders.
Sweeteners added by Paramount were key to tipping the board’s favor. The company agreed to fund WBD’s hefty breakup costs for abandoning Netflix: $2.8 billion payable to Netflix, plus about $1.5 billion in fees tied to a WBD debt exchange that would be derailed by switching deals. Paramount also boosted the reverse termination fee – the penalty it would owe WBD if regulators block the merger – to $7 billion, up from $5.8 billion previously. These concessions effectively neutralize the financial risks WBD cited in initially rebuffing Paramount’s advances.
Another incentive is a “ticking fee” provision: Paramount offered WBD shareholders an extra $0.25 per share per quarter (about $650 million every three months) for any delay in closing beyond 2026. This ticking fee signals Paramount’s confidence in obtaining approvals and provides investors added compensation if the deal drags into 2027. “We are pleased WBD’s board has unanimously affirmed the superior value of our offer, which delivers … certainty and speed to closing,” Paramount’s Ellison said, emphasizing that the cash bid offers a quicker, surer payoff for shareholders.
Financing for the massive acquisition is lined up from an array of deep-pocketed backers. The Ellison family (through the Larry Ellison Trust) and partner RedBird Capital have committed roughly $40–45 billion in equity to backstop the bid. Notably, Oracle co-founder Larry Ellison – David Ellison’s father and one of the world’s richest individuals – is personally providing a large portion of that capital. In addition, Middle Eastern sovereign wealth funds from Saudi Arabia, Qatar and Abu Dhabi, along with Affinity Partners (an investment firm led by Jared Kushner), are contributing to the financing package. Major banks including Bank of America, Citigroup, and Apollo Global Management have underwritten about $57.5 billion in debt financing for the deal, up from $54 billion in earlier commitments as the bid expanded. The formidable financing stack underlines Paramount’s determination and the unusual alignment of Hollywood interests with Silicon Valley and Middle East investors in this deal.
The $31-per-share offer represents a rich premium – roughly 139% above WBD’s stock price before takeover talks leaked – making it one of the largest media acquisitions in history by transaction value. If completed, the merger would create a new entertainment powerhouse by combining two iconic Hollywood studios (Warner Bros. and Paramount Pictures) and their streaming platforms. David Ellison, 43, only last year took control of Paramount (merging his Skydance Media with the company) and now stands to greatly expand his empire virtually overnight. “Warner Bros. is a world-class organization, and we can’t wait to get started working together telling the stories that move the world,” WBD CEO David Zaslav said, signaling his support for the tie-up after Netflix’s exit.
Competitive and Regulatory Scrutiny
This outcome caps a months-long bidding war that saw the world’s largest streaming service (Netflix) pitted against a traditional Hollywood player (Paramount) supercharged by outside capital. Each side aggressively courted WBD’s investors and regulators with arguments about which deal would better serve the industry. Paramount positioned itself as a more palatable owner for WBD by emphasizing its commitment to theatrical releases and pro-competition stance – in effect painting Netflix as an already-dominant streaming giant whose absorption of WBD could stifle competition. “We believe our offer will create a stronger Hollywood,” Paramount’s Ellison said when launching the bid, vowing to bolster theatrical distribution and champion creative talent. The company even enlisted political allies: Ellison personally lobbied officials in Washington, and former President Trump publicly questioned Netflix’s proposed deal on competitive grounds.
Netflix, for its part, argued it would be a “better steward” of WBD’s franchises, promising fewer layoffs and more production investment than a leveraged buyout by Paramount might entail. Netflix executives noted that Paramount projected billions in synergies – which Netflix implied would come from steep cost-cutting and job losses. The bidding war also unfolded as a public relations battle, with Netflix co-CEO Ted Sarandos at one point accusing a Paramount-aligned campaign of spreading “misinformation” about Netflix’s intentions for WBD.
Ultimately, regulators and lawmakers scrutinized both takeover scenarios. Paramount’s bid to combine two major film/TV studios and a suite of cable networks has drawn concerns about media consolidation. A group of U.S. senators warned that a Paramount–WBD union could result in “one company controlling almost everything Americans watch on TV”. Prominent lawmakers, including Senator Elizabeth Warren, blasted the hostile bid as a “five-alarm antitrust fire” and pointed to the involvement of foreign sovereign funds and politically connected investors as a “who’s who of Trump buddies,” raising questions of national security and favoritism. Meanwhile, Netflix’s proposed purchase also faced bipartisan criticism and union opposition, amid fears that the streaming giant might gain outsized power over content and potentially drive up consumer prices. The U.S. Department of Justice had already issued a second request to Netflix, signaling an in-depth antitrust review of that deal. Paramount has argued its transaction would sail through regulatory approvals more easily, contending that keeping WBD out of Netflix’s hands preserves a key competitor in streaming. It has noted that even after merging, a Paramount–WBD entity would still trail Netflix in global subscribers and streaming viewership share, potentially strengthening the case that the deal is pro-competition.
Market Reaction and Next Steps
The resolution of this takeover battle is reverberating across the media sector and financial markets. As noted, Netflix’s stock spiked upward on relief that it won’t be committing over $80 billion to a mega-merger. Netflix will also receive a hefty $2.8 billion cash breakup fee, which it says may be used to fund content production and share buybacks. WBD shares, which had climbed amid the bidding, hovered below the $31 offer price, reflecting some remaining investor caution about regulatory approvals and the lengthy closing process ahead. Paramount Global’s stock was relatively steady; analysts suggest the market had largely priced in a Paramount victory after the WBD board’s endorsement of its offer.
Attention now turns to completing the deal. With Netflix stepping aside, WBD is expected to formally terminate its Netflix agreement (incurring the breakup fee) and accept Paramount’s takeover bid. Paramount’s offer was structured as a direct tender for WBD shares, and the WBD board’s “Superior Proposal” finding allows it to enter a definitive agreement with Paramount. WBD shareholders will likely be given the chance to tender their shares to Paramount Skydance in the coming weeks. Given the board’s support and the rich premium, investor acceptance is anticipated, though an official shareholder vote or tender results are pending. Activist investor Ancora Holdings, which had agitated for a higher bid, has indicated it supports Paramount’s proposal as the best obtainable outcome.
Regulatory reviews remain a final hurdle. The merger would create a company encompassing Paramount’s Paramount+ and CBS network alongside WBD’s HBO, Warner Bros. studio, and Discovery channels – a combination that will be examined by U.S. antitrust authorities, the European Commission, and other jurisdictions. Paramount has already certified compliance with an initial DOJ review, starting a 10-day clock under antitrust procedure, and says it has secured certain foreign approvals. Industry observers expect intense scrutiny but note that Paramount’s willingness to divest WBD’s news and sports channels (by spinning them into a separate “Discovery Global” entity) could alleviate some concerns. To reassure WBD shareholders, Paramount has agreed to the unprecedented $7 billion reverse breakup fee if regulators scuttle the deal, underscoring its confidence in an ultimate closing.
If successful, the Paramount–WBD combination would reshape Hollywood’s power structure. The merged company would boast a vast library of content – from DC Comics superheroes and Harry Potter at Warner Bros. to Mission: Impossible and SpongeBob SquarePants at Paramount – and a global streaming customer base second only to Netflix and Disney. Still, integration challenges loom large: the new owner must navigate WBD’s $87 billion debt load and the secular decline of cable TV even as it invests heavily in streaming. “This transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price,” Netflix’s Sarandos observed in withdrawing, in a nod to the deal’s risks.
For now, Netflix’s retreat marks the conclusion of a high-stakes takeover saga that captivated Wall Street and Hollywood. Barring any last-minute surprises, Paramount Skydance will acquire WBD, vaulting David Ellison into the top tier of media moguls and uniting two legendary studios under one roof. The deal – valuing WBD at $111 billion including debt – would rank among the largest media mergers ever, and could close by late 2026 pending regulatory clearance. WBD’s board lauded Paramount’s “value, certainty and speed” in contrast to the more complex Netflix arrangement. With Netflix choosing discipline over empire-building, and WBD set to join forces with Paramount, a new chapter in the streaming and content wars is poised to begin.
