Netflix announced on Thursday that it will not match Paramount Skydance’s latest all-cash proposal for Warner Bros. Discovery, effectively ending Netflix’s pursuit of a deal it had agreed to in December. Netflix had negotiated to buy part of Warner Bros. Discovery at $27.75 a share — an $82.7 billion valuation — but Paramount Skydance raised its full-company offer to $31 a share, valuing the deal at roughly $110 billion. The Netflix co-CEOs said the price required to match Paramount’s bid made the transaction financially unattractive, and Warner Bros. Discovery’s board has deemed Paramount’s proposal a “superior proposal.” The competing offers now set the stage for a high-stakes antitrust review by federal enforcers.
Key Takeaways
- Netflix agreed in December to acquire part of Warner Bros. Discovery at $27.75 per share, a deal valued at $82.7 billion.
- Paramount Skydance initially bid $30 per share for all of Warner Bros. Discovery, then raised its offer to $31 per share — implying roughly a $110 billion valuation.
- Warner Bros. Discovery’s board notified Netflix that the $31-per-share offer from Paramount Skydance constitutes a “superior proposal.”
- Netflix’s co-CEOs Ted Sarandos and Greg Peters said matching the higher price would make the deal financially unattractive.
- Netflix executives, including Sarandos, held meetings Thursday with White House and Justice Department officials; DOJ sources said a comprehensive antitrust review of the Netflix–WBD transaction was expected.
- Paramount Skydance pledged a $7 billion termination fee if regulatory obstacles scuttle its acquisition, signaling a readiness to assume regulatory risk.
- Warner Bros. Discovery controls major assets such as HBO, CNN, Food Network, HGTV, TBS, TNT and Turner Classic Movies — consolidation here raises competition concerns.
Background
The media and streaming industries have undergone intense consolidation since the streaming boom and the pandemic-era shakeout. Warner Bros. Discovery (WBD) emerged from its own consolidation and carries a broad portfolio of cable networks, film and streaming assets, including HBO and HBO Max. Netflix initially pursued a more limited purchase in December, negotiating to buy part of WBD at $27.75 per share, a deal Netflix characterized as having a clear regulatory pathway.
Paramount Skydance — the combined entity associated with Paramount and Skydance Media that also owns CBS News — made an all-cash offer for the entire company, first at $30 per share and then raising the bid to $31 per share this week. The higher all-cash bid for all equity fundamentally altered the calculus for shareholders and the WBD board, prompting the board to label the Paramount Skydance proposal as superior.
Main Event
On Thursday Warner Bros. Discovery’s board informed Netflix that Paramount Skydance’s $31-per-share offer was a superior proposal, triggering a decision point for Netflix. In a public statement, Netflix executives said their December transaction would have created shareholder value and had a clear path toward regulatory approval, but that matching the new price would make the deal unattractive financially.
Netflix co-CEO Ted Sarandos held meetings on Thursday with senior officials in Washington. Sources told reporters Sarandos met at the White House with chief of staff Susie Wiles and at the Justice Department with Attorney General Pam Bondi and the antitrust division’s acting chief, Omeed Assefi. DOJ officials indicated they anticipated a very comprehensive antitrust investigation of the proposed Netflix–WBD deal.
Paramount Skydance has argued publicly that combining its assets with Warner Bros. Discovery would benefit consumers and help the industry recover from pandemic-era disruption. The company did not immediately respond to requests for comment on Thursday after Netflix’s announcement. Paramount Skydance also included a $7 billion termination fee in its proposal to cover some regulatory fallout if the deal cannot close.
Analysis & Implications
The most immediate implication is a likely prolonged antitrust review if Paramount Skydance’s bid proceeds and wins shareholder approval. A combined Paramount Skydance–WBD would bring together two large portfolios of studio production, streaming platforms and cable networks, raising concentration concerns in content distribution and advertising markets. Regulators will examine market shares, potential foreclosure of rivals, and the merged company’s leverage over distributors and advertisers.
For Netflix, walking away preserves cash and avoids paying a premium that executives judged too steep. Netflix’s December proposal targeted specific WBD assets and had been positioned as easier to clear with regulators; the all-in cash bid for the entire company presents a different regulatory profile. Shareholders of Warner Bros. Discovery now face a choice between Netflix’s previously negotiated package and a higher-cash offer that seeks full control of the company.
The $7 billion termination fee built into Paramount Skydance’s offer is notable: it signals the bidder’s willingness to absorb a substantial cost if regulators block the acquisition. But a termination fee does not assuage antitrust concerns; it simply reallocates some transaction risk. Even with a generous fee, federal enforcers can seek remedies, divestitures or block the deal outright if they determine competition would be substantially harmed.
Comparison & Data
| Bidder | Offer per Share | Implied Transaction Value | Notes |
|---|---|---|---|
| Netflix | $27.75 | $82.7 billion | Targeted purchase agreed in December for part of WBD |
| Paramount Skydance | $31.00 | ~$110 billion | All-cash bid for entire company; includes $7B termination fee |
The table shows the stark gap between the previously negotiated Netflix arrangement and Paramount Skydance’s full-company offer. The cash nature of Paramount Skydance’s bid and the implied premium to shareholders make it more attractive on price alone, but the breadth of the transaction is what will draw regulatory scrutiny. Market observers will watch licensing arrangements, advertising market overlap and streaming subscriber footprints as the DOJ evaluates competition effects.
Reactions & Quotes
Netflix framed its decision in financial terms and stressed regulatory considerations. The company’s leadership emphasized discipline in capital allocation while acknowledging the value of the December transaction.
“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval,”
Netflix co-CEOs Ted Sarandos and Greg Peters (statement)
Paramount Skydance has defended its proposal as pro-consumer and pro-industry, arguing that larger scale would benefit content production and distribution amid an uneven recovery.
“[A combined company would] benefit consumers and help boost the entertainment industry,”
Paramount Skydance executives (company statement summarized)
DOJ officials signaled they expected a thorough antitrust review; that response underscores the legal and political hurdles ahead for any large media consolidation.
“We expect a very comprehensive antitrust investigation into the transaction,”
Justice Department officials (public reporting)
Unconfirmed
- Whether Paramount Skydance has secured all financing and regulatory assurances necessary to close at $31 per share is not publicly verified.
- It is not yet confirmed which specific divestitures or remedies, if any, federal enforcers would seek should they approve the merger.
- Any private discussions between executives at other major studios or streaming platforms about alternative bids remain unreported and unverified.
Bottom Line
Netflix’s decision to decline matching Paramount Skydance’s $31-per-share offer shifts the likely buyer for Warner Bros. Discovery toward Paramount Skydance, but it does not guarantee consummation. The all-cash, full-company bid is attractive on price, yet it invites heightened antitrust scrutiny because it consolidates major studios, streaming platforms and cable networks under one owner.
As the process unfolds, shareholders will weigh immediate cash value against regulatory risk and potential long-term synergies. The Justice Department’s forthcoming review, and any required remedies, will be the decisive factor in whether the proposed $110 billion transaction can proceed.