Netflix’s plans to acquire the iconic Hollywood studio and streaming giant Warner Bros. Discovery have been scuppered after Paramount stepped in with a superior offer that will be financed by eye-watering debt.
The streaming giant had bid $83 billion to buy Warner Bros., and a tentative agreement was signed in December, but Paramount kept agitating amid rising fears over what Netflix’s bid might mean. Following rumours of limited theatrical runs, worries that Netflix might be trying to establish a monopoly on streaming, and opposition from U.S. President Donald Trump, the company has decided to pull out of the bidding. Instead, Warner Bros. has accepted a new bid of $111 billion (approximately £82 billion) from Paramount Skydance.
Warner Bros. board of directors reportedly decided to recommend Paramount’s bid to shareholders ahead of Netflix’s offer, prompting the streamer to withdraw from the running. "The transaction we negotiated would have created shareholder value with a clear path to regulatory approval,” Netflix said in a statement to the press. “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.”
As a consolation, Netflix will pocket $2.8 billion from Warner Bros. due to a contractual stipulation that included compensation in the event the deal did not go through. Meanwhile, Paramount gets Warner Bros.’ film studio, HBO’s TV studio operation, all of the Warner Bros. Discovery TV channels and the HBO Max streaming service.
What’s interesting about this deal is that Paramount is actually much smaller than Warner Bros. The company has a market capitalization of just $12 billion, and it posted a $3.13 billion loss in its last financial year. That means the acquisition will be one of the most leveraged in history, relying on multiple billions of dollars in debt. Of course, there will be a lengthy closing process as regulators and competition authorities in multiple countries will have to study the deal closely.
Paramount hasn’t made its plans for what to do with Warner Bros. public, but it will likely lead to some changes in the streaming and home entertainment universes. Warner Bros. has two streaming services in HBO Max and Discovery+, while Paramount has its own in the shape of Paramount+ and the ad-supported Pluto TV platform. It also owns Channel 5 in the U.K. and its on-demand streaming service, 5.
Don’t be surprised if some sort of merger ends up happening, which will likely affect U.K. consumers considering that HBO Max is finally about to launch over here. While Netflix didn’t state any plans to merge HBO Max with its streaming platform, many assumed that it ultimately would do so, and there’s a consensus that Paramount will decide to do the same, merging it with Paramount+. Indeed, Bloomberg reported that this is the plan as early as October 2025, when the bidding process was still in full swing.
Still, that doesn’t mean it’s a done deal. Paramount has not yet said what will happen and it remains to be seen if it will be able to push the transaction through or not, considering the massive debt it will have to take on.
