Netflix made it official on February 26, 2026. The streaming giant is walking away from its plan to buy Warner Bros. Discovery after deciding that matching Paramount Skydance‘s latest offer simply costs too much. The move sent Netflix shares climbing more than 9% in after-hours trading, and social media users quickly started calling it a smart financial play.
The bidding war that has kept Hollywood guessing for months finally reached its breaking point this week. Warner Bros. Discovery’s board officially declared Paramount’s improved $31-per-share offer a “superior proposal” to the deal Netflix had on the table. Rather than raising its bid, Netflix chose to fold .
Netflix Co-CEOs Explain Why They Walked Away
Ted Sarandos and Greg Peters, Netflix’s co-chief executives, released a joint statement explaining their decision. The message was clear: they liked the deal, but not at any price.
“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, so we are declining to match the Paramount Skydance bid” .
The executives made a point to clarify that acquiring Warner Bros. was never something Netflix absolutely needed for survival. “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.,” they added. “But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price” .
They also thanked Warner Bros. Discovery leadership including David Zaslav, Gunnar Wiedenfels, Bruce Campbell, and Brad Singer for what they described as a fair and thorough process throughout the negotiations .
Paramount’s Winning Bid: What They Offered
Paramount Skydance sweetened its offer on February 23, 2026, proposing to buy all of Warner Bros. Discovery for $31 per share in cash. That values the company at approximately $111 billion, significantly higher than Netflix’s $82.7 billion bid for just the studio and streaming assets .
The new offer includes several key provisions that made it attractive to Warner’s board:
- A $7 billion termination fee if the deal falls through due to regulatory issues
- Agreement to cover the $2.8 billion breakup fee Warner Bros. would have to pay Netflix
- A commitment from Oracle founder Larry Ellison to provide additional capital if needed
- Support from Bank of America Merrill Lynch, Citi, and Apollo providing $57.5 billion in debt financing
Larry Ellison is the father of David Ellison, Paramount’s CEO, and has largely funded his son’s efforts to expand the Hollywood studio’s reach .
Netflix Gets a $2.8 Billion Breakup Fee
Walking away from the deal actually pays off for Netflix. The company stands to receive a $2.8 billion breakup fee following the termination of its previously agreed deal with Warner Bros. Discovery. Paramount has agreed to fund that payment as part of its superior offer .
The original agreement between Netflix and Warner Bros. reached in December 2025 included this breakup fee protection. At the time, the companies announced a cash-and-stock transaction valued at $27.75 per share, giving Warner Bros. Discovery an enterprise value of about $82.7 billion .
Investors Love Netflix’s Decision
The market responded positively to Netflix walking away. In after-hours trading on February 26, Netflix shares jumped more than 9%, climbing to around $92.69 . Some reports showed the stock rising as much as 10% in extended trading .
Analysts seemed to approve of the financial discipline. Jefferies analyst James Heaney maintained a Buy rating on Netflix with a target price of $134, suggesting there’s still room for growth . The average analyst target price for Netflix now stands at $112.29, with a high estimate of $151.40 .
Paramount’s stock also climbed about 6% following the news, while Warner Bros. Discovery shares dipped 1.7% .
Hollywood Heavyweights Traded Shots Over the Deal
The battle for Warner Bros. sparked public arguments between some of Hollywood’s biggest names. James Cameron, director of “Avatar,” wrote a letter to Republican Senator Mike Lee calling the proposed Netflix sale “disastrous for the theatrical motion picture business” and warning it would lead to massive job losses .
Mark Ruffalo, who has appeared in multiple Netflix original movies and plays the Hulk in the MCU, fired back on social media. He questioned whether Cameron opposed a Paramount acquisition as well, or just Netflix’s bid.
“So… the next question to Mr Cameron should be this… ‘Are you also against the monopolization that a Paramount acquisition would create? Or is it just that of Netflix?’” Ruffalo posted. “I think the answer would be very interesting for the film community to hear and one that should be asked immediately” .
Ruffalo added that he was speaking “on behalf of hundreds of thousands of film makers world wide” and questioned whether Senator Lee was equally concerned about the Paramount sale .
What Happens Next With Warner Bros.
Without a reciprocal offer from Netflix, Warner Bros. Discovery’s board now has the right to terminate its agreement with the streaming platform and move forward with Paramount. A shareholder vote on the Netflix deal was scheduled for March 20, but that vote may no longer happen .
The path forward still requires regulatory approval. Paramount has raised the termination fee it would pay should the deal fail to gain regulatory approval to $7 billion from $5.8 billion previously .
The proposed merger would reshape the American media industry. Warner Bros. assets include the historic film studio, HBO, HBO Max, CNN, TNT Sports, Discovery’s European free-to-air channels, and digital platforms such as Discovery+ and Bleacher Report .
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Netflix Plans to Spend $20 Billion on Content Instead
With the Warner Bros. deal off the table, Netflix is moving forward with its original plans. The company intends to invest about $20 billion this year on films and television series as it continues expanding its entertainment offerings .
The company also plans to resume its share repurchase program in line with its capital allocation policy .
Netflix executives emphasized that the core business remains strong and continues growing organically. The streaming giant reported more than 325 million paid subscribers in its Q4 2025 shareholder letter, making it the largest subscription video-on-demand provider by subscriber count .
During a Senate hearing in early February, Sarandos addressed concerns about what a combined Netflix-Warner Bros. would mean for consumers. He noted that “about 80% of HBO subscribers in the U.S. also subscribe to Netflix,” arguing they would actually get a “meaningful discount” if the two companies combined .
When Senator Amy Klobuchar asked how Netflix could ensure it remains affordable after a merger, Sarandos delivered a blunt response: “We are a one-click cancel, so if the consumer says, ‘That’s too much for what I’m getting,’ they can cancel with one click” .
That straightforward approach to pricing and value seems to be carrying over to how Netflix approached the Warner Bros. deal. When the price got too high, they simply walked away.
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