Netflix walks away from its deal to buy Warner Bros. after Paramount came back with a better offer

[Karlston]

The streaming giant isn’t going to match the ‘superior’ bid made by Paramount.

Image: The Verge

 

Netflix has dropped its $83 billion deal to acquire the Warner Bros. studio, HBO, and its streaming service HBO Max. In an announcement on Thursday, co-CEOs Ted Sarandos and Greg Peters say the streamer is “declining to match” the new bid made by Paramount:

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, so we are declining to match the Paramount Skydance bid.

 

We believe we would have been strong stewards of Warner Bros.’ iconic brands, and that our deal would have strengthened the entertainment industry and preserved and created more production jobs in the U.S. But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.

Though WBD agreed to its deal with Netflix last December, the David Ellison-led Paramount came back with a hostile bid to take over the entire company — not just parts of it. After a barrage of bids and even a lawsuit, WBD eventually gave Paramount one last chance to present its “best and final offer.”

 

Now, WBD says Paramount’s $31 per share all-cash bid represents a “superior” proposal. Under the deal, Paramount will cover the $7 billion regulatory termination fee in case its deal with WBD doesn’t close, along with the $2.87 billion termination fee it must pay Netflix for abandoning its deal. It also includes “a daily ‘ticking fee’ of $0.25 per quarter” that will “accrue after September 30, 2026, until the consummation of the Paramount transaction.”

 

In January, Netflix revised its acquisition agreement to an all-cash deal in response to increasing pressure from Paramount, while Sarandos testified before the Senate earlier this month to address concerns about the megamerger.

 

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Posted Friday 27 February 2026 at 11:55 am AEST (my time).

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[Francis Angrew]

Wow. If this holds, that’s a massive shift in the streaming landscape.

I’m not surprised Netflix walked away at that price. $83 billion was already huge, and matching a higher all-cash hostile bid just to “win” would’ve looked reckless. Their statement reads very much like “we wanted it, but not at any cost,” which honestly feels disciplined rather than weak.

Paramount covering both the $7B regulatory termination fee and the $2.87B breakup fee to Netflix is bold. That signals real confidence they can get this through regulators. The ticking fee structure is interesting too. It adds pressure to actually close the deal instead of letting it drag indefinitely.

From an industry perspective, it’s fascinating. A Netflix–Warner combo would have consolidated IP like crazy. Instead, we might be looking at a very different power structure if Paramount pulls this off. Either way, this feels like one of those moments we’ll look back on as a pivot point for streaming.

Curious how the market reacts next week.😊