Netflix has withdrawn from its planned acquisition of parts of Warner Bros. Discovery, paving the way for Paramount Skydance to buy the entire company. The deal, valued at $31 per share, includes commitments to maintain theatrical releases and faces regulatory scrutiny. Both companies aim to combine their struggling streaming and cable operations for greater profitability.
On February 27, 2026, Netflix announced it would not match Paramount Skydance's superior offer for Warner Bros. Discovery (WBD), effectively ceding the acquisition. Netflix co-CEOs Ted Sarandos and Greg Peters stated, "The transaction we negotiated would have created shareholder value with a clear path to regulatory approval. However, we’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive."
The shift follows Netflix's initial merger intentions announced on December 5, 2025, targeting WBD's streaming and movie studios for an equity value of $72 billion. Paramount Skydance, which merged with Paramount in an $8 billion deal less than a year ago, pursued a hostile takeover bid for the entire WBD, including cable networks. On Tuesday, February 25, 2026, Paramount raised its offer by $1 per share to $31 and agreed to cover WBD's $2.8 billion termination fee to Netflix, plus a potential $7 billion fee if the merger fails due to antitrust issues and a $0.25 per share ticking fee per quarter after September 30, 2026.
WBD's board deemed Paramount's proposal superior, and WBD CEO David Zaslav expressed enthusiasm: "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."
The merger would unite two media giants facing declining revenues. Paramount's streaming business reported adjusted OIBDA of minus-$158 million in Q4 2025, with Paramount+ reaching 78.9 million subscribers. WBD's streaming generated $393 million EBITDA for 2025, with 131.6 million subscribers across HBO Max and Discovery+. Their cable operations remain profitable, with Paramount at $1.1 billion OIBDA and WBD at $1.41 billion in Q4 2025.
Potential outcomes include merging HBO Max into Paramount+, as planned by Paramount CEO David Ellison, and adding WBD networks like CNN and HGTV to Paramount's lineup. Analysts like Laura Martin from Needham & Company noted Paramount "must have" WBD for profitability. However, concerns arise over viewpoint diversity, with changes at CBS News under new editor Bari Weiss and potential impacts on CNN.
Regulatory approval is pending, with scrutiny from federal, European, and state authorities, including California's Attorney General. The deal commits to producing 30 theatrical films annually and a 45-day theater window before video on demand, aiming for closure by Q3 2026. Following the announcement, Netflix shares rose over 10 percent, while Paramount's increased by 5 percent.
