Lead
On Thursday, Netflix announced it will not increase its offer for Warner Bros., effectively ceding the contest to David Ellison’s Paramount Skydance. Netflix co-CEOs Ted Sarandos and Greg Peters said the price required to match Paramount’s latest package was “no longer financially attractive,” framing the acquisition as optional rather than essential. Warner Bros. Discovery’s board earlier determined Paramount Skydance’s proposal to be a superior offer. With Netflix stepping aside, Paramount is positioned to close a deal that still faces regulatory and political scrutiny.
Key Takeaways
- Paramount Skydance (PSKY) submitted a $31-per-share proposal, which the WBD board labeled a “superior proposal” on Thursday.
- PSKY’s offer included a ticking fee of $0.25 per share per quarter starting after Sept. 30, 2026, and a $7 billion regulatory termination protection if regulators scuttle the deal.
- Paramount agreed to pay the $2.8 billion termination fee that Warner Bros. would owe Netflix under the existing merger pact.
- Netflix said matching PSKY’s package would not be financially attractive and declined to raise its bid; the company will continue investing about $20 billion in content this year.
- Netflix shares jumped more than 10% in after-hours trading on the news that it would receive the $2.8 billion termination payment.
- Despite Netflix’s withdrawal, the transaction faces U.S., European and state-level antitrust review, and political figures including Sen. Elizabeth Warren signaled opposition.
Background
The offer battle stems from Warner Bros. Discovery’s search for a buyer for its storied studio assets after a period of strategic repositioning under CEO David Zaslav. Media-industry consolidation has accelerated in recent years as companies seek scale to compete in streaming, theatrical distribution and global licensing. Paramount, led by David Ellison and allied with Skydance, assembled a bid combining cash-per-share terms with protections intended to reduce regulatory risk and speed closing.
Netflix’s interest was long viewed as a dramatic potential reshaping of the streaming-and-studio landscape: an acquirer with deep subscription reach and a big production budget. But Netflix framed the Warner deal as discretionary—something that would make financial and strategic sense only at the right price. Warner’s board conducted a formal process and concluded that PSKY’s package offered superior value and a clearer path to closing.
Main Event
On Thursday, Netflix co-CEOs Ted Sarandos and Greg Peters released a joint statement saying the terms needed to match Paramount Skydance’s most recent offer would render the transaction “no longer financially attractive.” They emphasized discipline in capital allocation and described the Warner assets as “nice to have” at the right valuation rather than a must-have asset at any cost.
Warner Bros. Discovery’s leadership responded by praising the competitive process and signaling readiness to move forward with PSKY. WBD’s David Zaslav said the board had unanimously affirmed the superior value of Paramount’s bid and expressed optimism about combining forces with Paramount Skydance to produce and distribute high-profile entertainment globally.
Key economic elements of PSKY’s proposal include a $31-per-share cash component, a ticking fee of $0.25 per share each quarter after Sept. 30, 2026, and a $7 billion regulatory-termination fund intended to protect shareholders if regulators block the transaction. Separately, Paramount committed to cover the $2.8 billion fee Warner would owe Netflix to terminate the existing merger agreement.
With Netflix stepping aside, market reaction was immediate: Netflix stock rose by more than 10% in after-hours trading as investors priced in the imminent termination payment and the company’s continued focus on content investment and share repurchases.
Analysis & Implications
The deal’s approval path remains uncertain. U.S. and European competition authorities will assess whether combining two major studio-streaming ecosystems reduces competition in content creation, licensing and distribution. State attorneys general also retain authority to challenge aspects of the transaction, meaning approval is not guaranteed even if federal antitrust agencies sign off.
Politically, the acquisition has already attracted criticism. Senator Elizabeth Warren called it an “antitrust disaster,” signaling possible Congressional scrutiny and public pressure that could complicate or slow regulatory review. David Ellison may face hearings or requests for testimony as lawmakers examine the likely effects on consumers, production jobs and independent studios.
For Netflix, the decision allows the company to conserve capital while continuing an aggressive content strategy: management reiterated plans to spend roughly $20 billion on films and series this year and to resume share repurchases. Financially, the $2.8 billion termination payment will be a near-term inflow if the existing breakup clause is triggered.
Comparison & Data
| Component | Paramount Skydance | Netflix |
|---|---|---|
| Per-share price | $31 per share | Not publicly matched to PSKY’s latest terms |
| Ticking fee | $0.25 per quarter (after Sept. 30, 2026) | — |
| Regulatory termination protection | $7 billion | — |
| Termination fee to Netflix | Paramount will cover $2.8 billion | — |
| Netflix content spend (2026) | — | Approximately $20 billion |
The table isolates the concrete financial protections PSKY offered to reduce closing risk and accelerate shareholder certainty. Those extra terms—particularly the sizeable regulatory termination protection and ticking fee—were central to WBD’s conclusion that the Paramount package was superior to Netflix’s earlier proposal.
Reactions & Quotes
Company leaders and public figures responded within hours of Netflix’s announcement, signaling both corporate courtesy and political friction.
“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval… but at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive.”
Ted Sarandos & Greg Peters, Netflix (co-CEOs)
“Once our Board votes to adopt the Paramount merger agreement, it will create tremendous value for our shareholders.”
David Zaslav, President & CEO, Warner Bros. Discovery
“We are pleased WBD’s Board has unanimously affirmed the superior value of our offer.”
David Ellison, CEO, Paramount
Unconfirmed
- Whether U.S. or European regulators will ultimately block the Paramount-WBD combination remains unresolved and subject to formal review.
- Potential Congressional hearings for David Ellison or other executives are likely but not scheduled as of Thursday.
- Exact timeline for the board vote and closing (or any extended process) has not been publicly finalized beyond the board’s earlier determination.
Bottom Line
Netflix’s choice to decline matching Paramount Skydance’s package hands momentum to David Ellison’s offer but does not guarantee regulatory approval. PSKY’s inclusion of a ticking fee and a $7 billion regulatory termination cushion were decisive in persuading the WBD board that its proposal offered superior value and speed to closing.
The transaction, if completed, would reshape studio ownership and could accelerate further consolidation in global content markets—yet it faces substantial antitrust and political hurdles that could alter or delay the outcome. Short-term winners include Netflix shareholders expecting the $2.8 billion termination payment and a refocused Netflix strategy centered on a $20 billion content slate and share repurchases.
Sources
- The Hollywood Reporter (news)