Paramount raises prices, Netflix "doesn't follow," Warner Bros. acquisition "settles"

Paramount Skydance Wins Bidding War for Warner Bros. Discovery; Netflix Withdraws, Hollywood Faces New Wave of Consolidation

On Thursday, February 26, Netflix co-CEOs Ted Sarandos and Greg Peters issued a statement saying that after Warner’s board deemed Paramount’s $31 per share all-cash bid superior to Netflix’s offer, the company would not follow through with their bid.

In the statement, Sarandos and Peters said:

Matching Paramount’s latest bid is no longer financially attractive. For us, this deal has always been “a bonus if the price is right,” not “something we must acquire at all costs.”

Since market rumors in September last year suggested Netflix might bid for Warner, Netflix’s stock has been under pressure, with a market value loss of over $170 billion. After announcing their withdrawal, Netflix’s shares surged up to 10% in after-hours trading on Thursday, interpreted by the market as avoiding a large-scale merger at an excessively high premium.

Warner CEO David Zaslav stated that once the board votes to approve the merger agreement with Paramount, “it will create enormous value for shareholders.”

If approved by regulators, Paramount will acquire Warner Bros. Discovery for approximately $81 billion, gaining top IP assets such as HBO, CNN, CBS News, Warner Bros. Pictures, and franchises like Harry Potter and Superman, positioning it as a major entertainment rival to Disney.

Paramount Reverses Course: From Rejection to Victory

For Paramount, this acquisition marks a turnaround.

Over the past year, Paramount’s multiple bids were rejected by Warner, which then initiated a formal sale process. In December last year, Netflix signed an agreement to acquire Warner at $27.75 per share, totaling $72 billion, becoming the leading bidder.

Paramount then launched a hostile takeover, directly offering shareholders $30 per share, bypassing management, and including Warner’s cable networks—assets Netflix was not interested in.

Earlier this week, Paramount increased its bid to $31 per share and made concessions on key terms.

Paramount will pay a $7 billion termination fee if the deal fails due to regulatory reasons; commit to paying Warner’s breakup fee of $2.8 billion to Netflix; and accelerate the start of the quarterly $0.25 per share “timing fee” from January next year to after September 30 this year.

Last August, Elon Musk’s Sky Skydance Media acquired Paramount Pictures, making Warner Bros. Discovery their top target. Previously, Paramount was considered too small to compete with giants like Disney, Netflix, and Amazon.

Regulatory Scrutiny: CNN Ownership Sparks Media Concentration Concerns

Despite Paramount’s ultimate victory, the deal still faces strict review by federal regulators.

Paramount’s streaming business is much smaller than Netflix’s, but this merger would combine two traditional film and TV studios under one roof, covering multiple cable channels such as CNN, TNT, TBS, and Food Network.

Of particular concern is CNN’s ownership. Once completed, Ellison will control both CBS News and CNN. Media advocacy group Free Press CEO Craig Aaron said:

The idea of Paramount controlling both CBS and CNN is unthinkable.

He added, “The new owner has promised President Trump that if given the chance, they will ‘completely reform CNN, and we know what that means.’”

CNN President Mark Thompson urged employees in an internal memo: “Don’t jump to conclusions before we know more.”

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