Netflix Is the Big Winner in Warner Takeover Battle as CEO Puts Shareholders Over Ego

 

# Netflix Is the Big Winner in Warner Takeover Battle as CEO Puts Shareholders Over Ego

**Published: February 27, 2026**

You know that feeling when you really want something, but the price gets too high, and you just have to walk away?

That's the moment that defines great leadership.

And that's exactly what Ted Sarandos and Greg Peters just did at Netflix.

In a stunning turn of events, Netflix has officially walked away from its months-long pursuit of Warner Bros. Discovery's studio and streaming assets . After Warner's board declared Paramount Skydance's latest $31-per-share offer a "superior proposal," Netflix had four days to match it. They responded in less than two hours: "No thanks" .

The result? Netflix shareholders cheered. The stock jumped more than 10% . And the company walked away with a cool $2.8 billion breakup fee, paid by Paramount .

Let me walk you through what just happened, why Netflix actually won by losing, and what this mega-merger means for everything from your streaming bill to the future of CNN.

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## The Short Version

**What happened:** After a months-long bidding war, Paramount Skydance won the right to acquire all of Warner Bros. Discovery for $31 per share in cash (about $111 billion including debt) . Netflix, which had a deal to buy Warner's studio and streaming assets for $27.75 per share (about $83 billion), declined to match the higher offer .

**Why Netflix walked away:** Co-CEOs Ted Sarandos and Greg Peters said the price required to match Paramount's bid was "no longer financially attractive" . They called the deal a "nice to have" at the right price, not a "must have" at any price .

**What Netflix gets:** A $2.8 billion breakup fee, paid by Paramount . Plus a stock that jumped more than 10% on the news .

**What Paramount gets:** All of Warner Bros. Discovery—HBO, HBO Max, CNN, TNT, TBS, DC Studios, Warner Bros. film studio, and a mountain of IP including Harry Potter, Game of Thrones, and Superman .

**What's next:** Regulatory scrutiny, for sure. California Attorney General Rob Bonta already has an open investigation, and Democratic senators are sounding alarms . But with the Ellison family's deep pockets and political connections, the deal has momentum.

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## The Bidding War That Consumed Hollywood

To understand why this matters, you need to know how we got here.

**Table 1: The Bidding War Timeline**

| **Date** | **Event** |

| :--- | :--- |

| December 2025 | Netflix agrees to buy Warner's studio and streaming assets for $27.75/share (~$83B)  |

| Late 2025 | Paramount launches hostile bid for entire company |

| February 23, 2026 | Paramount raises offer to $31/share, adds $7B regulatory termination fee, agrees to cover Netflix breakup fee  |

| February 26, 2026 | Warner board declares Paramount offer "superior"  |

| February 26, 2026 | Netflix declines to match, walks away  |

| March 20, 2026 | Warner board expected to vote on Paramount merger agreement  |

**The key difference:** Netflix wanted Warner's studio and streaming assets (film and TV production, HBO Max). Paramount wants **all** of Warner Bros. Discovery—including cable networks like CNN, TNT, and Discovery .

**The Ellison factor:** This deal is backed by Larry Ellison, the Oracle co-founder worth nearly $200 billion, who is bankrolling his son David's ambitions . The Ellison Trust is committing $45.7 billion in equity, up from $43.6 billion previously . Bank of America, Citi, and Apollo are providing $57.5 billion in debt financing .

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## Why Netflix Walked: A Masterclass in Discipline

Here's the part that impressed Wall Street.

Netflix had every reason to want this deal. Warner's studio and streaming assets would have added Superman, Harry Potter, and Game of Thrones to Netflix's library. It would have been a blockbuster combination.

But when the price got too high, Sarandos and Peters said no.

**Their statement said it all:** "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" .

**Translation:** We wanted it. But not at any cost.

**A Netflix adviser** put it even more bluntly: "There's no point in playing chicken with someone who won't turn the wheel" . That someone is Larry Ellison, who signaled a willingness to pay a price that Netflix viewed as irrational.

**The result:** Netflix shares jumped more than 10% . Investors love discipline. They love CEOs who don't let ego drive decisions.

**What Netflix does now:** Sarandos and Peters said they'll invest about $20 billion in original content this year and resume their share repurchase program . They're sticking to what worked for 20 years: delight members, grow profitably, drive shareholder value.

**The breakup fee:** Netflix walks away with $2.8 billion . That's not a bad consolation prize.

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## What Paramount Wins: The Combined Empire

If regulators approve this deal, Paramount Skydance will control an absolutely staggering collection of entertainment assets.

**Table 2: What Paramount Gets in the Merger**

| **Category** | **Assets** |

| :--- | :--- |

| **Film Studios** | Warner Bros. Pictures, New Line Cinema, DC Studios, Paramount Pictures |

| **Streaming** | HBO Max, Paramount+, Discovery+ |

| **Cable Networks** | HBO, CNN, TNT, TBS, Discovery, MTV, Nickelodeon, Comedy Central, Showtime |

| **Broadcast** | CBS |

| **IP Libraries** | Harry Potter, Game of Thrones, DC Universe (Superman, Batman), Lord of the Rings, Star Trek, Mission: Impossible, Transformers, Top Gun, The Godfather, Titanic, Barbie, Succession, The White Lotus, and dozens more  |

**David Zaslav**, Warner's CEO, is clearly excited: "Once our board votes to adopt the Paramount merger agreement, it will create tremendous value for our shareholders. We are excited about the potential of a combined Paramount Skydance and Warner Bros Discovery and can't wait to get started working together telling the stories that move the world" .

**The debt burden:** This would be one of the largest leveraged buyouts in history. Warner ended 2025 with $33.5 billion in debt. Add $57.5 billion in new financing, and the combined company would start with over $90 billion in debt .

**The savings plan:** Paramount's team has talked about $6 billion in cost savings. That means layoffs .

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## The Regulatory Gauntlet: This Deal Faces Real Hurdles

Here's where things get complicated.

**Federal approval:** TD Cowen analysts think approval from federal regulators "seems likely given the political environment" . That's a reference to the Ellison family's ties to President Trump.

**State opposition:** California Attorney General Rob Bonta, a Democrat, is already pushing back. "These two Hollywood titans have not cleared regulatory scrutiny – the California Department of Justice has an open investigation, and we intend to be vigorous in our review," he said .

**Senate skepticism:** Democratic Senators Elizabeth Warren, Bernie Sanders, and Richard Blumenthal have voiced concerns that approval could be tainted by political favoritism . Warren called the potential merger an "antitrust disaster" that would let "Trump-aligned billionaires" control what Americans watch .

**International review:** European regulators are also expected to weigh in .

**The breakup fee:** Paramount has raised the regulatory termination fee to $7 billion—meaning if the deal fails to close due to legal issues, they owe Warner that much .

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## The Political Angle: Trump, the Ellisons, and CNN

You can't talk about this deal without talking about politics.

**The Ellison-Trump connection:** Oracle founder Larry Ellison, David's father, has close ties to President Trump . Paramount's aggressive push comes just months after Skydance closed its own buyout of Paramount—a deal approved weeks after the company agreed to pay Trump $16 million to settle a lawsuit over editing at CBS's "60 Minutes" .

**CNN's fate:** Under Netflix's deal, CNN would have been spun off as a separate public company. Under Paramount's deal, CNN stays inside the combined giant .

That's significant because CBS, already under Skydance ownership, has seen editorial shifts. Free Press founder Bari Weiss was installed as editor-in-chief of CBS News, seen as a move to appeal to more conservative viewers . If the Warner deal goes through, critics expect similar changes at CNN—a network that has long drawn Trump's ire.

**Mike Proulx** at Forrester Research put it bluntly: "Any concerns about Netflix owning Warner Bros. are only heightened by the prospect of Paramount owning all of WBD. But it might not even matter. Politics are playing an outsized role in this deal, and they've been on Paramount's side from the get-go" .

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## What This Means for Your Streaming Bill

If you're a Netflix subscriber, you dodged a bullet. For now.

**Crystal Gorges**, a media analyst, previously warned that a Netflix-Warner merger would have given the streamer enormous pricing power. "Netflix subscribers should be prepared for price increases," she told the Daily Mail . The combination of HBO hits like "The White Lotus" alongside "Stranger Things" would have made Netflix nearly unstoppable.

**But Paramount's victory doesn't mean you're safe.** A Paramount-Warner tie-up still concentrates massive franchises under fewer corporate roofs. Historically, that gives media giants more pricing power .

**Don't expect one app to rule them all.** Analysts warn that combining libraries under one corporate roof won't mean instant access to everything in one app—and certainly not at today's prices .

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## The Winners and Losers

Let's tally up who came out ahead.

**Table 3: Winners and Losers in the Warner Battle**

| **Player** | **Outcome** | **Why** |

| :--- | :--- | :--- |

| **Netflix** | Big Winner | Walked away with discipline intact, $2.8 billion breakup fee, stock up 10%+  |

| **Warner Shareholders** | Winners | Get $31/share cash instead of $27.75, plus ticking fee protections  |

| **Paramount** | Winner, but in debt | Gets the empire they wanted, but with $90B+ debt burden  |

| **CNN** | Uncertain | Stays inside merged giant, faces potential editorial shifts  |

| **Streaming Consumers** | Uncertain | Fewer mega-mergers now, but long-term pricing pressure remains  |

**Netflix's discipline** is the story here. As one adviser put it, they were bidding against someone who wouldn't turn the wheel. So they stepped aside .

**Robert Fishman** at MoffettNathanson summed it up: "While the war for Warner Bros. Discovery ended sooner than expected, this result confirms our ongoing view that WBD was a necessity for PSKY while Netflix was being opportunistic. It signals that Netflix believes in its internal growth story enough to maintain M&A discipline" .

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## What This Means for You

### If You're a Netflix Subscriber

You should feel good about this. Netflix just proved they won't overpay for growth. They'll invest $20 billion in original content this year instead . That means more shows, more movies, and hopefully no sudden price hikes to fund a massive acquisition.

### If You're a Paramount+ or HBO Max Subscriber

Get ready for change. These two services will eventually need to figure out their relationship. Will they merge? Stay separate? Offer bundles? No one knows yet. But the combined company will have enormous leverage.

### If You're an Investor

Netflix's stock pop tells you everything. Wall Street rewards discipline. If you own Netflix, you just saw management prove they put shareholders first.

If you're watching Paramount, be aware of the debt load. Over $90 billion in debt is a lot to carry, even with Larry Ellison's backing.

### If You Care About News

CNN's future is now tied to a company with clear political leanings. CBS has already shifted under Skydance. Watch for similar changes at CNN if the deal closes.

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## Frequently Asked Questions

**Q: Did Netflix lose the bidding war?**

A: In a sense, yes—they won't acquire Warner's assets. But they walked away with $2.8 billion, a stock pop, and their discipline intact. That's a win by most measures .

**Q: How much did Paramount offer?**

A: $31 per share in cash for all of Warner Bros. Discovery, valuing the deal at about $111 billion including debt .

**Q: How much did Netflix offer?**

A: $27.75 per share for Warner's studio and streaming assets only, about $83 billion including debt .

**Q: Why did Netflix walk away?**

A: Co-CEOs Sarandos and Peters said the price required to match Paramount's offer was "no longer financially attractive." They called the deal a "nice to have" at the right price, not a "must have" .

**Q: What happens to CNN now?**

A: CNN will stay inside the combined Paramount-Warner company, rather than being spun off as Netflix had planned . That puts it under the same roof as CBS, which has already seen editorial shifts under Skydance ownership .

**Q: Will this deal pass regulatory review?**

A: Not a sure thing. California Attorney General Rob Bonta has an open investigation, and Democratic senators are raising alarms. But federal approval seems more likely given the political environment .

**Q: What does this mean for streaming prices?**

A: In the short term, you dodged a bullet. A Netflix-Warner combo would have given them enormous pricing power. But long-term, any consolidation tends to lead to higher prices .

**Q: What's a "ticking fee"?**

A: Paramount agreed to pay Warner shareholders an extra $0.25 per share for every quarter the deal drags on past September 30, 2026 . That's about $650 million per quarter.

**Q: Who is Larry Ellison?**

A: The co-founder of Oracle, worth nearly $200 billion. He's the father of Paramount CEO David Ellison and is backing this deal with massive equity commitments .

**Q: What's next for Netflix?**

A: They'll invest about $20 billion in original content this year and resume share repurchases. Back to basics .

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## The Bottom Line

Here's what I keep coming back to.

In Hollywood, egos are big. Deals get done because people want to win, want the prize, want to be the one holding the trophy.

Ted Sarandos and Greg Peters just proved that Netflix is different.

They walked away from Superman, Harry Potter, and Game of Thrones because the price got too high. They put shareholders over ego, discipline over desire. And the market rewarded them with a 10% stock pop and $2.8 billion in walking-away money .

**The Netflix statement** said it best: "This transaction was always a 'nice to have' at the right price, not a 'must have' at any price" .

That's leadership.

**For Paramount,** the real work begins now. They've won the prize, but they're taking on over $90 billion in debt to get it . They'll need to find $6 billion in savings, which means layoffs and restructuring . And they'll face scrutiny from regulators, politicians, and a public wary of media consolidation.

**For the rest of us,** we're watching one of the biggest media mergers in history take shape. Two of Hollywood's last five legacy studios will combine. CNN and CBS will sit under the same roof. Harry Potter and Superman will join Mission: Impossible and Top Gun.

It's a new era. And it started with Netflix saying "no thanks" to a deal that didn't make sense.

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*Got thoughts on the Warner battle? Glad Netflix walked away? Worried about the merger? Drop a comment and let me know.*