Paramount Derailed Netflix’s Bid to Acquire Warner Bros Discovery

On Thursday, February 27, Netflix said it would not raise its offer to match Paramount’s $31-per-share bid after WBD’s board deemed that proposal “more attractive” than Netflix’s agreement. The price required to equal the offer meant the deal “no longer made financial sense,” the company said.

Netflix’s decision clears the way for Paramount to gain control of assets including HBO, CNN, and film franchises such as Harry Potter and Batman. The takeover promises far-reaching consequences for Hollywood and the wider media market.

Until the final round of talks, WBD had rejected eight offers from Paramount. The media group, led by David Ellison and backed by his father, billionaire and Oracle founder Larry Ellison, first approached WBD in September.

Unlike Netflix’s bid, Paramount’s proposal covers the entirety of WBD’s business, including CNN, HBO, and other cable networks. If approved, the Ellisons would gain control of some of the most influential brands in American news—CBS News, 60 Minutes, and CNN.

After Skydance and Paramount merged last year, the Ellisons emerged as some of the most influential figures in the US media industry. Paramount shares rose 8.8 percent in premarket trading on Friday, lifting the company’s market capitalization above $12 billion.

WBD chief executive David Zaslav said a merger with Paramount would “create enormous value for our shareholders.” The deal must still secure regulatory approval in the United States and Europe.

California Attorney General Rob Bonta pledged to conduct a “tough” review of the transaction. “Paramount/Warner Bros is not a done deal,” he said. “These two Hollywood giants have not cleared regulatory scrutiny. The California Department of Justice has an open investigation, and we intend to act decisively.”

Netflix shares also rose 8.8 percent in premarket trading, as investors welcomed the company’s decision to walk away from one of the largest media deals in history, burdened by significant antitrust risks. In December, Netflix had agreed to acquire WBD’s studio and streaming business for nearly $83 billion.

Netflix co-chief executives Ted Sarandos and Greg Peters said the company would have been a “responsible steward” of WBD’s brands, while stressing that “this deal was always attractive at the right price—but not at any price.”

Netflix’s bid drew regulatory scrutiny and criticism from parts of Hollywood, where resentment still lingers over how the streaming pioneer has reshaped the industry. Sarandos pledged that, if WBD were acquired, Netflix would release films in theaters more frequently, though many viewed those assurances with skepticism.

After WBD’s board backed the deal with Netflix, Paramount launched an aggressive pressure campaign to force talks to reopen. The company appealed to the administration of Donald Trump and threatened a proxy fight to replace WBD’s board.

Paramount raised its offer by $1 per share—to $31 from the December proposal—and provided financing assurances. The improved terms included a payment of $0.25 per share for each quarter the deal failed to close after the end of September, as well as a $7 billion break-fee guarantee should regulators block the transaction.

In addition, Paramount offered to cover the $2.8 billion termination fee WBD would owe Netflix if the original agreement were scrapped.

The talks were also shaped by politics. Donald Trump, who considers Larry Ellison a supporter, commented repeatedly on the transaction. The US president has also purchased corporate bonds issued by Netflix and Warner Bros worth roughly $2 million.

In December, Trump said that if Netflix were to acquire Paramount, it would gain “a very large share of the streaming market,” adding: “That could become a problem.”

Over the weekend, Trump urged Netflix to remove Susan Rice, a former Democratic national security official, from its board or “face consequences,” after she criticized corporate leaders who had “bent the knee” to the president. On Tuesday, David Ellison attended Trump’s address to Congress as a guest of Republican Senator Lindsey Graham.

Paramount sought to persuade investors that its path to regulatory approval was more viable than Netflix’s—an argument Netflix continued to dismiss even after walking away from the deal.