News: Paramount Set for $111 Billion Warner Bros Takeover After Netflix Drops Bid — What It Means for Hollywood and Investors
Key Takeaways
- Paramount Skydance's $31-per-share all-cash bid for Warner Bros Discovery, valued at approximately $111 billion including debt, was deemed superior to Netflix's offer by the WBD board.
- Netflix walked away rather than overpay, with its stock rising 10% in extended trading as investors appeared relieved the streaming giant avoided a costly acquisition.
- The deal faces significant regulatory hurdles including a California AG investigation, DOJ antitrust review, and European regulatory approval before it can close.
- If approved, the merger would create the largest media company since the Disney-Fox deal, combining HBO, CNN, DC Comics, and Harry Potter with CBS, Nickelodeon, and Paramount's film slate.
- Political concerns surround the deal due to the Ellison family's ties to the Trump administration and questions about CNN's editorial independence under new ownership.
Paramount Skydance is poised to acquire Warner Bros Discovery in a deal worth approximately $111 billion including debt, after Netflix declined to raise its competing offer. The Warner Bros Discovery board on Thursday deemed Paramount's revised $31-per-share all-cash bid to be superior to an existing agreement with the streaming giant, ending a months-long bidding war for one of Hollywood's most storied studios.
The deal, if approved by regulators, would create a media behemoth combining Paramount's CBS, Nickelodeon, and Comedy Central with Warner Bros' HBO, CNN, DC Comics, Harry Potter, and Game of Thrones franchises. Netflix co-CEOs Ted Sarandos and Greg Peters said the acquisition was always a "nice to have at the right price, not a must have at any price," signalling the streaming company's disciplined approach to dealmaking even as it walked away from arguably the biggest prize in entertainment.
Markets reacted swiftly to the news. Netflix stock spiked 10% in extended trading on Thursday, while Paramount gained 5%. Warner Bros Discovery shares dipped 2%, trading at around $28.80 with a market capitalisation of roughly $71.4 billion. The divergent reactions underscore Wall Street's view that Netflix may have dodged an expensive bullet while Paramount faces the harder task of proving its massive bet will pay off.
How the Bidding War Unfolded
The contest for Warner Bros Discovery began in September 2025 when David Ellison's Paramount Skydance sent an unsolicited offer to WBD, prompting the company to explore a formal sale process. By December, WBD had struck a deal with Netflix to sell its film and streaming divisions — including HBO — for $27.75 per share, roughly $82 billion including debt. The agreement would have left WBD's traditional television networks and CNN as a separate, independent company.
Paramount refused to concede. In January, the company launched a hostile tender offer, going directly to WBD shareholders in what CEO David Ellison described as an attempt "to finish what we started." The move drew both admiration and criticism across the industry. When Netflix granted WBD a seven-day waiver to reopen talks with Paramount, Sarandos framed it as giving shareholders "complete clarity and certainty" amid what he called Paramount's strategy of "flooding the zone with confusion."
This week, Paramount raised its bid to $31 per share from $30, sweetening the deal further by agreeing to cover a $2.8 billion breakup fee that WBD would owe Netflix and offering a $7 billion reverse breakup fee should the merger fail to win regulatory approval. The combination of a higher price and substantial downside protection proved decisive for WBD's board. "It will create tremendous value for our shareholders," WBD CEO David Zaslav said in a statement welcoming the decision.
The Scale of What Paramount Is Buying
If regulators approve the deal, Paramount Skydance would absorb one of the entertainment industry's most valuable intellectual property libraries. Warner Bros Discovery's roster includes DC Comics superheroes (Batman, Superman, Wonder Woman), the Harry Potter and Wizarding World franchise, Lord of the Rings, Game of Thrones, Looney Tunes, and Scooby-Doo. The company also distributes Legendary Entertainment's Dune and Godzilla/King Kong franchises. In 2025, Warner Bros was the second-highest grossing studio at the domestic box office, ahead of Paramount in fourth place.
Beyond film, the deal would bring HBO Max's streaming subscribers into Paramount's portfolio, merging them with Paramount+ to create a streaming service with significantly greater scale. The combined entity would also control CNN, the Food Network, TBS, TNT, and a range of sports broadcasting rights alongside Paramount's CBS, Nickelodeon, Comedy Central, and MTV.
The strategic logic is clear but the execution risk is enormous. Paramount's own box-office track record has been inconsistent — its biggest hit remains 2022's Top Gun: Maverick at $1.4 billion globally, but only five Skydance-produced films have crossed $200 million domestically. Warner Bros' proven franchises could provide the consistency that Paramount has lacked, but integrating two massive media companies while managing roughly $111 billion in combined enterprise value will test even the most capable management team.
The Regulatory Hurdle and Political Dimension
The deal faces significant regulatory scrutiny from multiple jurisdictions. California Attorney General Rob Bonta said Thursday that the potential merger "is not a done deal," noting his office has an open investigation and intends to be "vigorous" in its review. The entertainment industry represents a critical sector for California's economy, and any deal of this magnitude affecting Hollywood studios, production jobs, and media distribution will draw intense attention.
Beyond California, Paramount will need approval from the U.S. Department of Justice and European regulators. Antitrust concerns centre on the concentration of media ownership — the combined entity would control a vast share of film production, streaming content, cable networks, and news broadcasting.
The political dimension adds further complexity. Paramount's bid is backed by tech billionaire Larry Ellison, a major Republican donor with close ties to President Donald Trump. Trump has frequently attacked CNN over its reporting and said in December that he believed CNN should be sold as part of any Warner Bros deal, calling those running the network "corrupt or incompetent." Trump's son-in-law and adviser Jared Kushner initially supported the hostile bid through his investment firm Affinity Partners before backing away in December amid scrutiny.
Paramount's 2025 merger with Skydance itself drew scrutiny during negotiations with the Trump administration's FCC. Among the concessions made was Paramount's $16 million settlement on behalf of CBS News over a lawsuit Trump had filed regarding a "60 Minutes" interview with former Vice President Kamala Harris. The settlement and subsequent leadership shakeups at CBS News raised concerns about political influence over editorial independence — concerns that now extend to CNN's future under Paramount ownership.
What Netflix's Walk Signals About the Streaming Landscape
Netflix's decision to walk away may prove to be as significant as Paramount's decision to bid. With a market capitalisation of approximately $358 billion and shares trading at $84.59 — up 2.3% on Thursday — Netflix remains the dominant force in streaming by a wide margin. The company's discipline in refusing to overpay suggests confidence that its organic content strategy can deliver returns without the baggage of legacy media assets.
"The transaction we negotiated would have created shareholder value with a clear path to regulatory approval," Sarandos and Peters said. "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."
The stock market's enthusiastic response to Netflix walking away tells its own story. Investors appear relieved that Netflix won't be taking on WBD's substantial debt load and the operational complexity of integrating traditional television networks, a news division, and legacy content distribution agreements. Netflix's model — a pure-play streaming company built on technology rather than legacy media infrastructure — may ultimately prove more valuable than the sprawling media conglomerates that defined the 20th century.
For context, Disney — which operates the closest equivalent to what a combined Paramount-WBD would look like — has a market capitalisation of $187 billion and trades at $105.60 per share with a price-to-earnings ratio of 15.55. The comparison illustrates both the potential and the challenge: even Disney, with its unmatched brand portfolio, trades at a fraction of Netflix's valuation.
Implications for the Broader Media Industry
If the Paramount-WBD merger clears regulatory review, it would mark the largest media consolidation in decades and reshape competitive dynamics across entertainment, news, and streaming. The combined entity would control an extraordinary breadth of content — from prestige HBO dramas and CNN's 24-hour news coverage to children's programming on Nickelodeon and tentpole DC superhero films.
For the workforce, the outlook is sobering. Hollywood has already been hit by waves of layoffs and production cuts, and any merger of this scale would inevitably bring staff reductions as the companies eliminate duplicate functions. CNN's future has been a particular source of anxiety — CNN head Mark Thompson reportedly emailed employees urging them not to "jump to conclusions about the future until we know more."
The deal also raises broader questions about media plurality and the concentration of narrative power. With fewer independent studios and networks, the range of voices in American media narrows further. Critics on both sides of the political spectrum have expressed unease — some worried about Silicon Valley's Netflix absorbing a storied studio, others concerned about perceived political connections between the Ellison family and the Trump administration influencing news coverage.
For investors, the key question is whether Paramount can execute on the integration while managing a combined debt load that dwarfs many standalone companies. The $7 billion reverse breakup fee provides some downside protection for WBD shareholders, but if the deal closes, Paramount's management will face the monumental task of extracting value from two complex organisations simultaneously.
Conclusion
The Paramount-Warner Bros Discovery deal represents a pivotal moment for the entertainment industry. If approved, it would create a media powerhouse rivalling Disney in scope and ambition, combining iconic franchises, premium streaming content, news broadcasting, and sports rights under a single corporate umbrella. The $111 billion price tag reflects both the immense value of these assets and the premium required to wrestle them away from a determined Netflix.
Yet the road ahead is fraught with uncertainty. Regulatory approval is far from guaranteed, with investigations already underway in California and federal antitrust review still to come. The political dimension — particularly around CNN's editorial independence — adds a layer of complexity that transcends normal dealmaking considerations. And even if the merger closes, the challenge of integrating two sprawling media companies while justifying the price paid will test David Ellison and his team for years to come.
For investors and industry observers alike, the question is not just whether this deal will happen, but whether the era of media mega-mergers can deliver value in an entertainment landscape increasingly dominated by technology-first companies like Netflix. Hollywood's biggest studios were built on the power of storytelling — now the story of who controls those stories has become the most consequential narrative in the business.
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