MW Trump allies David and Larry Ellison win battle for Warner Bros. Discovery after Netflix bows out

By Lukas I. Alpert

The streaming giant says countering Paramount's bid 'no longer financially attractive'

Warner Bros. Discovery decided to switch gears after months of having a deal with Netflix, deeming Paramount's newest proposal to be superior.

Netflix said Thursday that it was walking away from its agreement to acquire Warner Bros. Discovery, after the media giant said it had determined that a last-minute bid by Paramount Skydance was a better deal.

In a stunning turn of events, Netflix said that countering Paramount's latest offer was "no longer financially attractive" and that it had decided to abandon its bid.

"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," Netflix co-CEOs Ted Sarandos and Gary Peters said in a statement.

"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.," Sarandos and Peters added. "But this transaction was always a 'nice to have' at the right price, not a 'must have' at any price."

Warner Bros. Discovery shares $(WBD)$ fell more than 2% in after-hours trading Thursday, while Paramount shares $(PSKY)$ gained over 4%. Netflix's stock $(NFLX)$ jumped more than 10% on the news.

While Warner Bros.' and Netflix's decisions came down to price, one aspect that had loomed over the transaction all along was which deal the Trump administration - which has shown its willingness to involve itself in media deals and pressure companies that are not in the president's favor - was willing to allow through.

A key part of Paramount's pitch was that its offer is more likely to pass muster with regulators as CEO David Ellison and his father, Oracle $(ORCL)$ co-founder Larry Ellison, enjoy a good relationship with President Donald Trump. Last year, the Ellisons were able to acquire Paramount following a long regulatory review process after settling a defamation lawsuit with the president that most legal observers had deemed baseless.

The Trump administration has signaled that it intends to scrutinize the deal. Trump at one point said he had no plan to involve himself in the transaction - then, over the weekend, he demanded that Netflix fire board member Susan Rice, a former Obama administration official, or else "pay the consequences."

Regulators in Europe will also have to sign off on any deal.

The announcement comes after Warner Bros. Discovery's board said it considered the $31-per-share offer it received from Paramount earlier this week to be superior to the deal it reached with Netflix in December. WBD informed Netflix that it had four days to counter with a new proposal or abandon the deal.

"If the board determines in good faith, after consultation with its independent financial and legal advisors, that, after considering any revisions to the terms of the Netflix merger agreement proposed by Netflix, the [Paramount] proposal continues to constitute a 'company superior proposal,' WBD would be entitled to terminate the Netflix merger agreement," Warner Bros. Discovery said in a statement earlier on Thursday.

The reversal represented a dramatic change in fortune for Paramount, which had launched a hostile offer following WBD's acceptance of Netflix's bid in early December.

After repeated attempts to get the WBD board to reconsider, Paramount finally managed to punch through on Monday when it raised its offer by $1 per share, from its previous bid of $30 a share.

Paramount also offered to pay a 25-cents-a-share "ticking fee" for every quarter the deal doesn't close after Sept. 30 of this year, as well as a $7 billion termination fee if the merger does not clear regulatory hurdles, and a $2.8 billion breakup fee that WBD would be required to pay Netflix.

"We are pleased WBD's board has unanimously affirmed the superior value of our offer, which delivers to WBD shareholders superior value, certainty and speed to closing," Paramount CEO David Ellison said in a statement earlier this week.

The significantly sweetened bid from Paramount put the onus on Netflix to either raise its bid of $27.75 per share for Warner's studio and streaming businesses or drop out of the bidding.

Paramount had previously offered $108 billion to acquire all of Warner Bros. Discovery, including its declining television business, which includes cable channels like CNN, Discovery and Cartoon Network. Netflix's bid of $82.7 billion was just for its streaming and studio divisions, leaving WBD's television unit to be spun off into a separate company.

Many in Hollywood had raised concerns regarding a sale to Netflix, pointing to the company's history of moving away from industry-accepted norms regarding theatrical releases and exclusivity agreements.

Sarandos said Netflix intended to run Warner Bros. independently from the rest of the company and maintain its studio's existing practices in regards to theatrical releases.

Additionally, Netflix had argued that the amount of debt Paramount would need to finance the deal would result in broad layoffs in order to make it financially sustainable.

-Lukas I. Alpert

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February 26, 2026 19:14 ET (00:14 GMT)

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