Netflix Backs Out From Warner Bros Discovery Deal

Netflix Inc. has officially backed out of its Warner Bros Discovery deal, declining to raise its offer and effectively ending its pursuit of the iconic Hollywood studio and streaming assets. The decision follows after Warner Bros Discovery’s board (WBD board) declared Paramount's latest $111 billion USD bid as a “superior proposal” than the agreed terms of its merger with Netflix.

Paramount Skydance raised its previous $30-per-share (~$108B) hostile bid to $31-per-share (~$111B), triggering a four-day window for the streaming giant to respond. Netflix almost immediately responded with its intention not to match it, saying the deal was “no longer financially attractive.”

In a joint statement, Netflix co-CEOs Ted Sarandos and Greg Peters emphasized that the proposed transaction was “always a ‘nice to have’ at the right price, not a ‘must have’ at any price.” The streaming giant has also affirmed its continued focus on its core business and planned $20B investments in films and series for 2026 season.

On the other hand, the WBD board, which seemed hell-bent on the Netflix agreement, is in favor of Paramount’s new bid. WBD CEO David Zaslav welcomed the possibility of a combined Paramount Skydance-WBD entity, stating the Paramount deal would offer “tremendous value for our shareholders.”

Warner Bros Discovery Board’s Rationale for Considering Paramount’s Amended Offer

As mentioned, Paramount Skydance’s revised offer of $31-per-share in cash, in addition to enhanced deal terms, was judged superior to Netflix’s previously agreed $27.75-per-share arrangement for WBD’s studio and streaming assets. Unlike Netflix, David Ellison’s Paramount would be acquiring the entirety of WBD, including its cable service businesses, if it gets approved.

Paramount’s proposal also includes Warner’s $2.8B termination fee owed to Netflix and a $7B regulatory breakup fee if the deal fails to close. Additionally, Paramount moved the start date of the “ticking fee” of $650M to shareholders in every quarter from Dec 31, 2026, to Sep 30, in the newly amended offer.

In addition, Paramount also agreed to WBD’s “Company Material Adverse Effect” terms, affirming that the price would remain unchanged before the deal closes, even if the linear networks decline faster than anticipated.

Warner’s board cited enhanced value as a possible core reason for reconsidering Paramount’s bid. Board chair Samuel A. Di Piazza Jr. emphasized the “rigorous process” and his excitement about the combined entity’s prospects.

Netflix’s Statement on Backing out of the Warner Bros Discovery Deal

Netflix highlighted that their agreed terms with WBD “would have created shareholder value with a clear path to regulatory approval,” mentioning it was based on discipline and value constraints. The company noted, while Warner Bros. is a prominent studio, they would not match the amount of Paramount’s latest offer to acquire it.

The streaming company also showed gratitude to the WBD Board, Zaslav, Bruce Campbell, Gunnar Wiedenfels, and Brad Singer for the fair and rigorous process of WBD’s partial sale. They asserted that the potential Netflix-WBD merger would not only have strengthened the entertainment sector but also safeguarded and generated additional production employment opportunities.

However, Sarandos and Peters’ statement hinted that buying WBD assets was a “nice” option but not necessary for Netflix’s growth. “Netflix’s business is healthy, strong, and growing organically,” stated Netflix.

The Caveats of Paramount's Warner Bros Discovery Deal

Sen. Elizabeth Warren characterized the emerging Paramount-WBD merger as an “antitrust disaster,” warning that the consolidation could lead to higher prices and fewer choices for American families. Additionally, she questioned the political influence of wealthy backers aligned with the Trump administration.

Warren’s comments follow the reports that the Netflix co-CEO Sarandos met with Trump administration officials in Washington shortly before announcing Netflix’s withdrawal. David Ellison, the president and chair of Paramount, is the son of Oracle founder Larry Ellison, who is an open supporter of the Trump administration. 

Larry Ellison has also been backing Paramount’s WBD bid and has been vocal about the conditions of WBD’s Netflix agreement. On the other hand, David Ellison flew to the U.K. to negotiate with regulators about the Netflix-WBD merger. The Ellison family’s political-leaning and extreme steps have fueled speculation about political influence in the strategic decisions on both sides.

California Attorney General Rob Bonta has stated that the potential Paramount-WBD deal hasn't "cleared regulatory scrutiny," emphasizing that the state's DoJ has opened an investigation. Along with fewer choices for consumers, regulators are citing “increased unaffordability” and loss of jobs.

With Paramount poised to proceed and antitrust scrutiny becoming louder, the final fate of this months-long media consolidation depends not just on shareholder approval but on regulators. It still remains to be seen how vigorously regulators challenge the potential dominance of a combined Paramount-WBD entity and how Paramount defends, even though the company has been stating its proposal would clear antitrust scrutiny.