Paramount Pays $2.8 B Termination Fee as Netflix Drops Warner Bros. Bid
NEW YORK (Feb. 27, 2026) — In a dramatic shake‑up of Hollywood’s corporate landscape, Paramount Skydance has paid Netflix a $2.8 billion termination fee after the streaming giant withdrew its bid to buy Warner Bros. Discovery (WBD). The payment clears the way for Paramount’s own acquisition of the storied media company, ending a months‑long bidding battle between two of entertainment’s biggest players.
The fee stems from Paramount’s agreement to cover the cost Warner Bros. would owe Netflix for terminating their previously signed merger deal, allowing Warner Bros.’ board to pivot toward Paramount’s rival offer without triggering litigation or financial penalties for Netflix.
A High‑Stakes Bidding War
The acquisition fight over Warner Bros. — which controls iconic film and TV brands, the HBO Max streaming platform and major cable networks — had been unfolding since late 2025, with Netflix and Paramount pursuing very different strategies. Netflix originally agreed to a deal to buy parts of Warner Bros.’ assets, including its studios and streaming business, but was ultimately outbid by Paramount’s more aggressive full takeover proposal.
Despite holding a legal right to match Paramount’s improved offer, Netflix opted not to increase its bid further — citing that matching the terms would make the transaction “no longer financially attractive,” according to co‑CEOs Ted Sarandos and Greg Peters.
Paramount’s bid, valued at $31 per share in cash and totaling roughly $110 billion including debt, included several incentives for Warner Bros. shareholders and protections against regulatory risk, such as a $7 billion regulatory termination fee and a quarterly “ticking fee” that ramps up if the deal closes slowly.
Why the Termination Fee Matters
Under the terms of the original Warner Bros.–Netflix merger agreement, Warner Bros. would have owed Netflix a hefty fee for abandoning that deal. Paramount agreed to shoulder this cost — $2.8 billion — enabling Warner Bros. to switch partners without directly paying its former suitor.
The termination fee payment — confirmed in an SEC filing — was executed concurrently with the termination of the Netflix merger agreement and the entry into a new merger pact between Warner Bros. and Paramount.
Industry Reaction and Market Response
The news sent ripples through financial markets and the media industry. Netflix’s shares climbed following the announcement, reflecting investor approval of the company’s decision to walk away from what it deemed an overly costly acquisition. Paramount stock also rose as Wall Street reacted to the likelihood that the deal will close under its terms.
Analysts have framed Netflix’s choice as a strategic retreat — one that preserves its financial strength and focus on organic growth, content investment and global expansion without the distraction of integrating a sprawling traditional media empire.
Meanwhile, Paramount stands poised to reshape the industry if its acquisition of Warner Bros. successfully passes regulatory and shareholder approval. The combined entity would control a vast content library, multiple streaming platforms and a host of entertainment properties that could rival larger players like Disney and Amazon — even as regulatory scrutiny and antitrust reviews intensify.
What’s Next
With the termination fee paid and Netflix formally out of the race, Paramount’s focus turns to finalizing the merger with Warner Bros. Discovery — a process that could take many months and face regulatory hurdles in the United States and abroad. If completed, the deal would mark one of the largest media mergers in history and significantly alter the competitive dynamics of film, television and streaming.
