On February 26, 2026, a seismic shift rippled through the entertainment industry as Netflix, the world’s leading streaming platform, announced it was abandoning its high-profile bid to acquire Warner Bros. Discovery. The decision followed Warner Bros. Discovery’s board declaring a sweetened offer from Paramount Skydance as a “superior proposal,” ending months of speculation, boardroom drama, and market jitters.
Netflix’s move, coming after a series of escalating bids and tense negotiations, sent its shares soaring nearly 10% in after-hours trading, closing above $92 after ending regular trading at $84.59. According to Variety, this surge reflected Wall Street’s relief that Netflix was stepping back from what many investors considered a risky and expensive foray outside its core business. As one analyst put it, Netflix “won by losing”—a sentiment echoed by Bloomberg, which described the company as having just “won by losing” after its shares rose as much as 13% in extended trading.
The origins of this corporate saga stretch back to December 2025, when Netflix stunned the industry by outmaneuvering Paramount to secure a deal to buy Warner Bros. Discovery’s studio and streaming businesses for $27.75 per share. This would have marked the first giant acquisition in Netflix’s history, an $83 billion leap into legacy media territory, including theatrical distribution and cable networks—areas far removed from Netflix’s digital-first DNA. The acquisition would have brought under Netflix’s roof the storied DC Comics library, the Harry Potter film and television rights, and HBO, still widely regarded as the gold standard in premium television.
But the deal never sat well with everyone. Investors, as reported by Business Insider, balked at the price tag and the strategic risks, pushing Netflix’s stock down sharply after the announcement. Republicans in Congress also voiced strong opposition, accusing Netflix of “pushing woke content” and raising concerns about media consolidation. At a congressional hearing earlier in February, Netflix faced pointed criticism, and former President Donald Trump—whose approval was seen as crucial for regulatory sign-off in 2026—publicly pressured the company, even demanding the removal of a board member who had offended him. Netflix co-CEO Ted Sarandos visited the White House on the day of the announcement, reportedly seeking assurances from the Trump administration, but none were forthcoming.
Meanwhile, Paramount Skydance, led by Larry and David Ellison, was not standing still. In February 2026, Paramount raised its offer to buy all of Warner Bros. Discovery—including its cable business, such as CNN, TBS, and TNT—from $30 per share to $31 per share, all cash. Paramount’s revised bid also included a $7 billion breakup fee if the merger failed regulatory approval and an agreement to pay the $2.8 billion breakup fee that Warner Bros. Discovery would owe Netflix if their deal collapsed. As CNBC detailed, the Warner Bros. Discovery board promptly granted Netflix four business days to respond.
Netflix, however, chose not to escalate the bidding war. In a joint statement, co-CEOs Ted Sarandos and Greg Peters explained, “The transaction we negotiated would have created shareholder value with a clear path to regulatory approval. 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.” They added, “This transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.” Sarandos later told CNBC that Netflix had granted Warner Bros. Discovery a seven-day waiver to reengage with Paramount, saying, “Paramount had been making a ton of noise, flooding the zone with confusion for shareholders… So we’ve given the opportunity to get those shareholders exactly what they deserve, which is complete clarity and certainty.”
Warner Bros. Discovery CEO David Zaslav struck a gracious tone in the aftermath, stating, “Netflix is a great company and throughout this process Ted, Greg, Spence and everyone there have been extraordinary partners to us. We wish them well in the future.” Zaslav expressed excitement about the potential of a combined Paramount Skydance and Warner Bros. Discovery, promising “tremendous value for our shareholders.”
The market’s reaction was swift and telling. Netflix’s stock spiked, while Paramount shares gained 5% and Warner Bros. Discovery’s fell by 2%. According to Investors Business Daily, Netflix had its best day in over a year. The message from investors was clear: they preferred Netflix’s disciplined retreat over an expensive expansion into unfamiliar territory.
Behind the scenes, the deal’s demise was shaped by a complex web of political, financial, and industry forces. As Business Insider reported, Netflix shareholders and Republicans were united in their opposition to the acquisition, while the Ellison family—relatively new to media ownership—worked diligently to win the favor of the Trump administration. Paramount’s financing, as of December 2025, included a hefty $24 billion from Saudi Arabia, Qatar, and Abu Dhabi, adding another layer of intrigue to the international chess game playing out in Hollywood’s boardrooms.
If Paramount’s deal goes through, the Ellisons will control a media conglomerate of unprecedented scale, encompassing two movie studios, two major news operations, two major streaming services, and a broadcast network with a long-running NFL contract. As Business Insider noted, this would be an “astonishingly large and influential portfolio for any owner, let alone a family with a minimal track record running media companies.”
For Netflix, the outcome is both a relief and a reset. The company avoided a costly and contentious acquisition, preserved shareholder value, and reaffirmed its commitment to strategic discipline. As Sarandos and Peters put it, “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.”
As the dust settles, questions linger about the future of Warner Bros. Discovery’s assets, the Ellisons’ stewardship, and the evolving landscape of global media. But for now, Netflix’s decision to walk away from the deal stands as a powerful reminder that sometimes, in the high-stakes world of corporate mergers, knowing when to fold can be the smartest play of all.