Netflix Walks Away from Warner Bros. Discovery Deal as Paramount Makes Superior Offer
After a White House meeting with Attorney General Pam Bondi, Netflix’s Ted Sarandos was faced with a tough decision. Warner Bros. Discovery had just announced that Paramount’s latest bid for the media company was deemed a “superior proposal” to Netflix’s offer. Sarandos quickly consulted with key executives, including CFO Spencer Neumann and co-CEO Greg Peters, to determine their next steps.
Under the terms of their agreement, Netflix had four business days to match or exceed Paramount’s offer of $31 per share to acquire Warner Bros. Discovery. However, Netflix was only interested in acquiring Warner’s studio and streaming business, not its struggling cable division. With the numbers not adding up, Sarandos decided not to drag out the process and promptly informed Warner Bros. Discovery’s CEO, David Zaslav, that Netflix would be walking away from the deal.
In a joint statement released by Sarandos and Peters, they expressed that the deal was no longer financially attractive at the price required to match Paramount’s offer. They emphasized that the acquisition was always a “nice to have” at the right price, not a “must have” at any price. The decision to walk away was supported by an internal email to Netflix staff, highlighting the company’s focus on organic growth rather than acquisitions.
Analysts had anticipated that the Warner Bros. Discovery deal could have accelerated Netflix’s growth by attracting new subscribers and driving engagement. However, with Netflix bowing out, the potential transformational acquisition was suddenly off the table. Despite the setback, the co-CEOs stood by their decision, putting shareholder value above executive ego.
Paramount’s relentless pursuit of Warner Bros. Discovery paid off, with their owner, David Ellison, making a compelling case for a better deal for shareholders. With a core team of trusted advisors and board members, including Safra Katz and Justin Hamill, Paramount was able to force Warner Bros. Discovery back to the negotiating table.
During the negotiation period, which spanned from Feb. 17 to Feb. 23, discussions between Warner Bros. Discovery and Paramount Skydance were held virtually, with no in-person meetings taking place. Despite the intense back-and-forth, Paramount’s determination ultimately led to their successful bid for Warner Bros. Discovery, marking a significant shift in the media industry landscape. The tension between Paramount and Warner Bros. Discovery (WBD) has been palpable, with a history of unsolicited offers and disrupted plans leading to a strained relationship between the two sides. Paramount’s initial offer to buy WBD last September forced a hurried auction process, derailing the original plan to spin off WBD’s linear cable channels into a separate entity called Discovery Global.
Despite the discord, a weekend of negotiations between Paramount and WBD resulted in an improved offer from Paramount, sweetening the deal to $31 per share and including a “ticking fee” for potential delays in the regulatory process. Ultimately, the offer was too good for David Zaslav and his team to pass up.
The news of Paramount’s successful bid was met with celebrations at Paramount’s headquarters, as the acquisition of Warner Bros. was seen as a critical move in realizing Paramount CEO Larry Ellison’s vision of creating a media powerhouse. However, the real challenge lies ahead for Paramount, as they navigate the transition from cable to streaming and manage a significant debt load of over $78 billion.
The merger of Paramount and Warner Bros.’ film and TV studios is expected to result in layoffs and a restructuring of senior management, creating a competitive and potentially tumultuous environment within the combined entities. The fate of HBO Max and Paramount+ remains uncertain, as does the future of WBD’s extensive portfolio of cable channels.
The industry-wide consolidation and uncertainty surrounding the deal have left many industry insiders feeling fatigued and skeptical about Paramount’s ability to deliver on its promises of increased streaming content and theatrical releases. With significant debt and high expectations, Paramount faces a daunting task in revitalizing the newly merged company and returning it to its former glory.
The Paramount-WBD transaction marks the latest in a series of ownership changes for Warner Bros., HBO, and other channels, adding to the complexity and challenges facing the entertainment industry. The deal is seen as a necessary move for Paramount, but one that will require significant cost-cutting measures and a careful balancing act to reduce debt and maintain financial stability.
While the merger presents opportunities for growth and expansion, the road ahead for Paramount Skydance and Warner Bros. Discovery will undoubtedly be a challenging one, with the burden of debt and high expectations looming large. Only time will tell if this ambitious deal will prove to be a success or a setback for both companies involved. The entertainment industry is abuzz with the news of the potential merger between Netflix and Warner Bros. Discovery (WBD). Analysts have been closely watching the situation, with many speculating on the implications of such a deal. In a recent research note, analyst Yoon expressed caution, stating that while the merger could lead to significant growth opportunities, the companies would first need to focus on cutting costs and reducing debt before investing in expansion.
One key concern among filmmakers is Netflix’s commitment to the theatrical business. Some have raised doubts about the streaming giant’s promise to continue releasing Warner Bros. films in theaters and honoring traditional home entertainment windows. In contrast, Paramount has positioned itself as a staunch defender of the cinematic experience, vowing to increase the number of films released in theaters post-merger.
However, Paramount’s ownership of Warner Bros. Discovery has raised eyebrows due to concerns about Ellison’s ties to the Trump administration. Some artists fear that Ellison’s political affiliations could stifle free expression and influence the types of content produced by the studios. The appointment of conservative columnist Bari Weiss as editor-in-chief at CBS News has only heightened these concerns, with some questioning whether Paramount’s content will align with right-wing ideologies.
David Ellison’s aggressive pursuit of Warner Bros. Discovery has not gone unnoticed, with critics pointing to his family’s wealth and connections to President Trump as potential motives for the merger. Ellison’s lobbying efforts have focused on painting Netflix as a monopoly power in the streaming pay TV market, a narrative that has attracted attention from regulators in the U.K. and European Union. Some observers have drawn parallels between Ellison’s actions and tech leaders’ support of Trump, highlighting a trend of big business aligning with authoritarian leadership.
As the legal and regulatory scrutiny intensifies, both Netflix and Paramount are facing challenges in navigating the merger process. Netflix CEO Ted Sarandos has personally lobbied political leaders in support of the deal, while state attorneys general are gearing up for their own investigations. The focus has shifted to vertical-merger issues and the potential impact on competition in the industry.
Despite the uncertainty surrounding the merger, Netflix executives have expressed relief at the outcome, with Paramount Skydance agreeing to pay a $2.8 billion breakup fee. While there is disappointment at missing out on the deal, there is also a sense of relief at avoiding a potentially risky venture.
Looking ahead, the industry is bracing for a period of uncertainty as the merger plays out. Concerns about the impact on film acquisitions and dealmaking are mounting, with filmmakers noting delays in project approvals. With a change in ownership on the horizon, Warner Bros. Pictures may face challenges in making long-term strategic decisions.
While Ellison’s political affiliations have sparked controversy, some in Hollywood are impressed with the executive team he has assembled at Paramount. As the merger progresses, all eyes will be on how the combined entity navigates the challenges and opportunities that lie ahead. Josh Greenstein, who made the move from Sony Pictures to Warner Bros. to help oversee the film studio alongside Dana Goldberg, has quickly made a name for himself by making tough decisions on film projects. His keen eye for talent has also led the studio to secure high-profile projects from acclaimed filmmakers like James Mangold and rising star TimothĂ©e Chalamet.
One media executive who has worked closely with Greenstein praised his straightforward approach, stating, âJosh is the real deal. He is a straight shooter. And in a matter of months, heâs stocked a cupboard that was once bare.â This sentiment is echoed by many within the industry who have taken notice of the positive changes Greenstein has brought to Warner Bros. Pictures.
The studio itself has experienced a notable upswing at the box office, following a string of disappointing releases in 2024 and early 2025. Recent hits like âSinnersâ and âOne Battle After Anotherâ have positioned Warner Bros. as a major player in both commercial success and critical acclaim. However, as the studio gears up for a new chapter, there are murmurs of potential executive shake-ups on the horizon.
While Greenstein and Goldberg have proven their ability to lead Warner Bros. to success, the looming question remains about the future of current chiefs Pam Abdy and Michael De Luca. Industry insiders suggest that retaining Abdy and De Luca would be a smart move, but the competitive nature of Hollywood may necessitate tough decisions in the near future.
Meanwhile, over at Paramount Pictures, similar challenges lie ahead as the studio navigates key management decisions and strategic moves to revitalize its presence in the ever-evolving entertainment landscape. The recent $2.8 billion deal with Netflix adds another layer of complexity to Paramount’s roadmap, as the studio seeks to carve out its place in the streaming era.
As both Warner Bros. and Paramount face pivotal moments in their respective journeys, the industry watches with anticipation to see how these studios will adapt and thrive in a rapidly changing landscape. The future of Hollywood is uncertain, but with leaders like Josh Greenstein at the helm, there is no doubt that exciting new developments are on the horizon.
Contributors to this report include Matt Donnelly and Todd Longwell, whose insights have shed light on the evolving dynamics within the entertainment industry.
