Netflix walks away from Warner Bros deal, clearing the path for
Paramount
[February 27, 2026] By
WYATTE GRANTHAM-PHILIPS
NEW YORK (AP) — Netflix is walking away from its offer to buy Warner
Bros. Discovery’s studio and streaming business, in a stunning move that
effectively puts Paramount in a position to take over its storied
Hollywood rival.
On Thursday, Warner’s board announced that Skydance-owned Paramount’s
latest offer to buy the entire company for $31 per share was superior to
the agreement it had previously struck with Netflix. Warner gave Netflix
four business days to come up with a counteroffer — but Netflix instead
responded less than two hours later, declining to raise its proposal. It
said the new price it would have to pay made the deal “no longer
financially attractive.”
“We believe we would have been strong stewards of Warner Bros.′ iconic
brands," Netflix's co-CEOs Ted Sarandos and Greg Peters said in a joint
statement. "But this transaction was always a ‘nice to have’ at the
right price, not a ‘must have’ at any price.”
A Paramount buyout of Warner Bros. Discovery would reshape Hollywood and
the wider media landscape. And unlike Netflix — which was only eyeing
Warner’s studio and streaming business — Paramount wants the entire
company. That means HBO Max, cult-favorite titles like “Harry Potter”
and even CNN could soon find themselves under the same roof as
Paramount's CBS, “Top Gun” and the Paramount+ streaming service.
The prospect of such a combination, which will still need the green
light from both Warner shareholders and regulators, poses both antitrust
concerns and questions of political influence.
Netflix's decision to walk away on Thursday marks the latest development
in a monthslong, messy corporate battle over Warner's future. Sarandos
and Peters thanked Warner's leadership despite the final outcome.
Warner had repeatedly backed the deal it struck with Netflix since
December right up until Thursday evening, when its board continued to
recommend Netflix even while calling Paramount's bid valued at about
$111 billion including debt “superior.” Netflix had previously put a
$27.75 per share offer on the table for Warner’s studio and streaming
business, totaling nearly $83 billion including debt.
In a statement Thursday night, CEO David Zaslav said Netflix executives
had been “extraordinary partners” and that he wished them “well in the
future.”
After months of a heated back and forth amid Paramount's hostile
campaign to take over Warner without the board's blessing, Warner also
changed its tune about the remaining prospective buyer.
Warner's board hasn't officially adopted Paramount's merger agreement
yet, but once it does, Zaslav said it “will create tremendous value.” He
added that the company was “excited about the potential of a combined
Paramount Skydance and Warner Bros. Discovery."
Paramount did not immediately respond to requests for further comment.
But CEO David Ellison earlier applauded Warner's board affirming “the
superior value of our offer.”
A Paramount-Warner combo would combine two of Hollywood’s five legacy
studios that remain today, in addition to their theatrical channels.
Beyond “Harry Potter,” Warner movies like “Superman,” “Barbie,” and “One
Battle After Another” — as well as hit TV series like “The White Lotus”
and “Succession” — would join Paramount’s content library.
Paramount’s lineup of titles include “Top Gun,” “Titanic” and “The
Godfather.” And beyond CBS, it owns networks like MTV and Nickelodeon,
as well as the Paramount+ streaming service.
A merger between the two companies would put CNN under the same roof as
CBS, which has already seen significant editorial shifts under new
Skydance ownership. Paramount took steps to appeal to more conservative
viewers in its news operations, notably with the installation of Free
Press founder Bari Weiss as editor-in-chief of CBS News. And if the
company’s takeover bid of Warner is successful, critics warn similar
shifts could happen CNN, a network that has long attracted ire from
Trump.
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The Paramount Pictures water tower is seen in Los Angeles, Dec. 18,
2025, with the Hollywood sign in the distance. (AP Photo/Jae C.
Hong, File)
 “Any concerns about Netflix owning
Warner Bros. are only heightened by the prospect of Paramount owning
all of WBD. But it might not even matter,” Mike Proulx, vice
president and research director at Forrester, a market research
company, said in an email. “Politics are playing an outsized role in
this deal, and they’ve been on Paramount’s side from the get‑go.”
President Donald Trump has a close relationship with the billionaire
Oracle founder Larry Ellison, the father of Paramount's CEO David
Ellison who is heavily backing Paramount’s bid to buy Warner. And
Paramount's aggressive push to acquire Warner arrived just months
after Skydance closed its own buyout of Paramount in a contentious
merger approved just weeks after the company agreed to pay the
president $16 million to settle a lawsuit over editing at
Paramount’s “60 Minutes” program on CBS.
Still, Trump has continued to publicly lash out at Paramount over
editorial decisions at CBS’ “60 Minutes.” And while the president
previously made unprecedented suggestions about his involvement in
seeing a Warner deal through, he's since walked back those
statements and maintained that regulatory approval will be up to the
Justice Department.
Still, top Democratic lawmakers have sounded the alarm about the
Republican president's ties to companies like Paramount and
potential consequences of growing corporate power.
"A handful of Trump-aligned billionaires are trying to seize control
of what you watch and charge you whatever price they want,"
Democratic Sen. Elizabeth Warren, a longtime antitrust hawk, said in
a statement Thursday night. She also called a potential
Paramount-Warner combo an “antitrust disaster."
Executives at Paramount have argued that merging with Warner will
allow it to compete with bigger rivals particularly in the streaming
space, and bring larger content libraries for its customers. But
Warren and other critics say such a merger threatens higher prices,
and that a Warner takeover would only further consolidate power in
an industry already run by just a few major players. Some trade
groups also warn that could mean job losses and less diversity in
filmmaking.
When Netflix was still in the running, one of its key arguments
against a Warner-Paramount tie-up was that it would combine two very
similar companies: two legacy studios, two theatrical channels and
two major news networks. The streaming giant said that posed a
higher risk for job losses and other competition concerns.
In contrast, executives from both Netflix and Warner argued at a
Senate antitrust hearing earlier this month that Netflix doesn’t
have the same studios and film distribution that Warner does. That
was “one of the reasons that the Netflix offer appeals to us so
much,” Bruce Campbell, Warner's chief revenue and strategy officer,
told senators on Feb. 3 — noting that the company believed Netflix
would not only keep Warner's operations intact, but “invest in
continued production.”
How regulators will respond to a Warner-Paramount deal remains to be
seen. The U.S. Department of Justice has already initiated reviews,
and other countries are expected to do so, too.
Warner shareholders will have to be convinced, too. Beyond a higher
price, Paramount has also tried to entice them by pledging to move
up a previously-promised “ticking fee.” The company initially said
it would pay 25 cents per share for every quarter the deal drags on
past the end of the year. Now it’s agreed to pay that amount if the
deal doesn’t go through by the end of September. It also agreed to a
regulatory termination fee of $7 billion.
But Paramount is taking on billions of dollars in debt to finance
its offer — something critics have warned could only increase to the
likelihood of potential job losses and other restructuring down the
road. Foreign sovereign wealth funds have also provided equity for
the offer, drawing added scrutiny.
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