BREAKING: Netflix Concedes Warner Bros. Battle as Paramount Bid Emerges as Front-Runner

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Netflix has dropped out of the competition to buy Paramount and Warner Bros., significantly improving the chances of David Ellison’s Skydance making a deal.

Netflix announced on Thursday that it won’t increase its offer for the company, suggesting that the rising cost – due to a better offer from Paramount – has made the deal too expensive.

Netflix leaders Ted Sarandos and Greg Peters announced they are relinquishing their roles, according to a recent statement.

We had a deal in place that we believed would benefit our shareholders and likely receive regulatory approval. However, to beat the recent offer from Paramount Skydance, we would have had to pay a price that no longer made financial sense, so we’ve decided not to pursue it, the co-CEOs explained.

This decision effectively stops Netflix from continuing its efforts and significantly changes the situation surrounding Warner Bros. Discovery’s plans.

Paramount Skydance Now in Pole Position

Now that Netflix has decided not to meet the new requirements, Paramount is expected to win the deal, as long as its board and regulators give final approval.

As reported by The Hollywood Reporter, Warner’s board decided on Thursday that Paramount’s offer was better than the current deal with Netflix.

Paramount Skydance’s latest offer reportedly includes:

  • $31 per share
  • A $0.25 quarterly ticking fee beginning after Sept. 30, 2026
  • A massive $7 billion regulatory termination fee
  • Agreement to cover the $2.8 billion breakup fee owed to Netflix

Those sweeteners appear to have shifted the economics decisively.

Netflix Signals Discipline, Not Desperation

Netflix executives explained that their decision to move away from Warner Bros. was a planned strategy, not a response to something that happened.

We appreciate David Zaslav, Gunnar Wiedenfels, Bruce Campbell, Brad Singer, and the Warner Bros. Discovery Board for a fair and thorough evaluation of our offer. While we’re confident we could have successfully managed Warner Bros.’ valuable brands and boosted the entertainment industry – including creating more U.S. production jobs – this deal wasn’t essential for us, and ultimately wasn’t worth pursuing at any cost.

The way Netflix described Warner Bros. as simply a “nice to have” is telling—it shows they never considered Warner Bros. crucial to their overall plan.

Instead, the company says it will continue focusing on organic growth.

Netflix announced plans to spend around $20 billion on new shows and movies this year, and they are also starting to buy back company stock again.

What Happens Next

If things continue as they are, Paramount Skydance is likely to acquire Warner Bros. Discovery, but there are still challenges to overcome.

  • Warner board final approval
  • Shareholder processes
  • Regulatory review

Now that Netflix has dropped out of the bidding process, the intense competition seems to be easing up.

Investors reacted positively to the news, and Netflix stock rose over 10% in trading after the market closed.

The Bigger Industry Picture

Netflix dropping out of the competition significantly changes a high-profile business dispute in Hollywood. Warner Bros. Discovery will hold a company-wide meeting tomorrow, February 27th at 11 AM Eastern Time, to discuss the situation.

The potential merging of Paramount and Warner Bros. has been a major topic in the media industry for months. Currently, it looks increasingly likely that David Ellison will be the one to lead any changes.

As a film buff, I’m really curious to see if this deal will actually go through, and if it does, what the resulting company will end up looking like. It’s the big question everyone in the industry is asking right now.

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2026-02-27 02:57