NEW YORK — Netflix abruptly ended its months-long pursuit of Warner Bros. Discovery on Thursday, February 26, declining to raise its $82.7 billion offer after the media company's board declared a rival all-cash bid from Paramount Skydance superior, clearing the way for one of the largest entertainment mergers in history and handing David Ellison a dramatic come-from-behind victory that few industry insiders saw coming just weeks ago.

A Deal Unravels at Speed

The collapse of Netflix's bid unfolded within the span of a single afternoon. Warner Bros. Discovery's board formally determined that Paramount Skydance's revised proposal of $31 per share in cash was a superior transaction to the existing Netflix merger agreement, triggering a four-business-day window under which Netflix had until March 4 at 11:59 p.m. ET to submit a higher counteroffer. Netflix chose not to wait. Within barely an hour of the WBD board's announcement, the streaming giant issued a joint statement from co-CEOs Ted Sarandos and Greg Peters declaring it would walk away entirely.

"The transaction we negotiated would have created shareholder value with a clear path to regulatory approval," Sarandos and Peters said in the statement. "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." The speed of the decision shocked Hollywood observers who had expected Netflix to fight harder, particularly given that Sarandos had spent that same morning in Washington, D.C., meeting with officials from the Trump administration in an effort to advance regulatory support for the deal.

The original Netflix-WBD merger agreement, signed on December 4, 2025, had valued WBD's streaming and studio assets at roughly $72 billion in equity at $27.72 per share, with Netflix additionally assuming nearly $10 billion in existing WBD debt, bringing the total enterprise value of the offer to approximately $82.7 billion. That deal had excluded WBD's sprawling linear cable network portfolio, which the company had separately planned to spin off into a standalone entity to be called Discovery Global.

Paramount's Escalating Counter-Campaign

Paramount Skydance's path to victory required relentless persistence against what initially looked like long odds. The company made its first unsolicited approach to WBD well before the Netflix deal was announced, but those early overtures were repeatedly rebuffed by WBD's leadership, with executives publicly raising doubts about Paramount's financial capacity to complete a transaction of that scale. When WBD instead signed a merger agreement with Netflix in December 2025, Paramount launched a hostile takeover campaign.

The critical turning point came when Paramount submitted a revised all-cash bid on February 24, 2026, offering $31 per share for the entirety of WBD, including its linear cable assets. That valued the combined transaction at approximately $111 billion, a figure that towers above the Netflix offer not only in per-share price but in scope, since Paramount's bid encompasses WBD's cable networks such as CNN, TNT, TBS, the Discovery Channel, HGTV, and Food Network, all of which would have been excluded from Netflix's transaction. Paramount also agreed to assume approximately $33 billion of WBD's outstanding debt and committed to paying the $2.8 billion termination fee that WBD would otherwise owe Netflix for ending the existing merger agreement.

Financing the bid required extraordinary capital mobilization. Paramount's market capitalization stands at roughly $12 billion, a fraction of the deal's total value, making external financing structures central to the transaction. The arrangement includes a $57.5 billion debt commitment from Bank of America Merrill Lynch, Citigroup, and Apollo Global Management, alongside equity contributions from Larry Ellison, the Oracle executive chairman and father of Paramount CEO David Ellison, whose net worth Bloomberg has estimated at $201 billion. Sovereign wealth funds from Qatar, Saudi Arabia, and the United Arab Emirates, along with Redbird Capital Partners, are also participating as financial backers. Additionally, Paramount's revised bid includes a $7 billion regulatory termination fee payable in the event antitrust authorities ultimately block the transaction, a provision that clearly resonated with WBD's board as a meaningful risk-transfer mechanism.

Markets Deliver a Swift Verdict

Equity markets reacted sharply and in conflicting directions, reflecting the complexity of the outcome for each company. Netflix shares surged more than 10% in extended after-hours trading on Thursday following the announcement, a move that analysts interpreted as investor relief that the streaming leader would not overextend its balance sheet on an acquisition that would have brought substantial integration risk and significant leverage. The gain came despite the fact that Netflix had invested months of executive time and reputational capital in pursuing WBD. Paramount shares rose as much as 5% in extended trading, reflecting confidence that the Ellison-led consortium could finance the deal and bring it to close. WBD shares, by contrast, fell approximately 1.39%, a muted reaction that may reflect uncertainty about the lengthy regulatory review process that now lies ahead, as well as the complexity of absorbing a company with over $33 billion in net debt.

The market movements occurred in after-hours trading on the Nasdaq (Netflix, ticker NFLX) and on the Nasdaq and CBS-legacy listings for Paramount Global, as well as on the Nasdaq-listed WBD shares. Timing of the price moves centered on the period immediately following the joint Netflix statement, issued on the evening of February 26. The sharp post-announcement gain in Netflix's stock underscores a dynamic familiar from large-deal negotiations: investors in acquirers frequently reward restraint, since walk-aways signal balance sheet discipline and preserve capital for organic reinvestment.

What Changes for Hollywood and Media

The implications of a combined Paramount-WBD entity reshape the competitive map of the entertainment industry substantially. Paramount CEO David Ellison will oversee a sprawling portfolio that spans HBO and Max streaming, Warner Bros. Pictures and its vast film libraries, DC Comics and DC Studios, CBS, Paramount Network, Showtime, CNN, TNT, TBS, Cartoon Network, the Discovery Channel, Animal Planet, HGTV, Food Network, and dozens of additional properties across film and television. WBD CEO David Zaslav greeted the outcome positively in a public statement, calling Netflix a "great company" and expressing enthusiasm for the prospects of the combined Paramount-WBD entity, citing the potential to create "tremendous value" for shareholders.

Industry analysts note that Paramount's victory almost certainly means WBD will no longer execute the planned spinoff of its linear cable assets into Discovery Global, the standalone entity it had been preparing as a condition of the Netflix deal structure. That spinoff plan was itself the catalyst that set off the entire auction, since it was WBD's stated intention to divest its cable channels that first prompted Netflix to take a serious interest in acquiring the studio and streaming assets on a standalone basis. With Paramount taking the whole company, the cable networks will instead be integrated into Paramount's existing portfolio of linear channels, which includes CBS, MTV, Comedy Central, BET, and Nickelodeon, among others.

Theater chains and independent filmmakers, who had loudly objected to the prospect of a Netflix takeover on the grounds that the streamer's content model prioritizes streaming over theatrical release, expressed cautious relief at the outcome. Groups including Cinema United had argued before a U.S. House Judiciary Committee antitrust subcommittee that a Netflix acquisition would have posed an unprecedented threat to theatrical film distribution. Paramount's ownership model is seen as more compatible with traditional theatrical windows, though the coming regulatory process will test whether antitrust authorities agree that the combined entity's scale remains within acceptable competitive boundaries.

The Road Ahead for Regulators and Rivals

A formal deal announcement is expected on February 27, 2026, with the regulatory review process likely to extend well into 2026 and potentially beyond. Antitrust scrutiny is expected to be significant given the breadth of the combined entity's market position in television, film, news, and streaming. Under the terms of the agreement, the $7 billion regulatory termination fee provides WBD shareholders with material downside protection in the event the transaction is blocked by the Department of Justice or the Federal Trade Commission, a provision that distinguishes the Paramount offer from many prior large-cap media deals.

For Netflix, the question now turns to how it deploys the capital and strategic focus that would have gone into integrating WBD. The streamer has historically avoided large-scale mergers, preferring to invest in original content and licensing to drive subscriber growth. With over 300 million paid subscribers globally, Netflix remains the dominant force in streaming and retains significant financial firepower for targeted content investments, international expansion, and technology development. Its disciplined exit from the WBD process may ultimately be remembered not as a defeat, but as evidence of the operational focus that has defined its rise.

Written by Nick Ravenshade for NENC Media Group, original article and analysis.