Netflix drops out: Paramount wins the billion-dollar battle for Warner

Luca Fontana

27.2.2026

Translation: machine translated

Netflix is renouncing Warner and leaving one of the world's most valuable media archives to Paramount. The withdrawal ends a bidding war worth billions and fundamentally shifts the balance of power in the streaming business.

The biggest bidding war in Hollywood's recent history is over. Netflix is pulling out. No tweaking, no final bluff, no «all-in». This is what the streaming giant officially announces. It is thus leaving the field to traditional studio Paramount Skydance.

What sounds like a sober financial announcement is a tectonic shift in the power structure of the entertainment industry.

What happened

As recently as December, the deal seemed to be sealed. Netflix wanted to pay 27.75 dollars per share in cash, which equates to a total of 82.7 billion dollars including debt. Warner Bros. with HBO, the film studio, DC and the huge archive was to be integrated into the Netflix empire. The linear TV business, which includes the news channel CNN, would have been spun off.

However, Paramount persisted. After several attempts - and even a lawsuit - the studio submitted an improved offer: $30 to $31 per share for the entire company, linear TV business included, and also all cash. In addition, a «ticking fee» in the event of delays and the assumption of the 2.8 billion dollar termination fee compared to the Netflix deal that had already been agreed.

Warner's board of directors officially categorised this package as « superior» a few days ago and gave Netflix the opportunity to follow suit within four days. But Netflix decided against it.

The co-CEOs of the streaming giant, Ted Sarandos and Greg Peters, explain that the deal is «no longer financially attractive». And they emphasise: The transaction was always a «nice to have», not a «must have».

«Nice to have»? Not quite.

This formulation sounds like cool reason. But it is also PR. If the deal had materialised, Netflix would not have simply grown - the group would have become the most powerful content owner in modern entertainment. Netflix, HBO, Warner Bros, DC, «Harry Potter» - all under the umbrella of what is already the largest streaming service in the world. This is no minor matter.

At the same time, it's true: The price was enormous. A cash-only deal would have put Netflix into massive debt. The financial room for error would have shrunk drastically. Planning mistakes, expensive flops or strategic errors would have hurt much more quickly. It is not for nothing that Netflix's «All-in» has been talked about in recent weeks.

The nervousness was visible. The Netflix share came under pressure in the meantime, with investors fearing that the company could take itself over. The fact that the share price rose significantly after the withdrawal was announced speaks volumes. Sarandos is right: at some point you have to remain disciplined. Nevertheless, the idea of what could have been will probably keep him busy for a while.

And then it becomes political

If the regulatory authorities agree, one of Hollywood's most traditional studios would go to Paramount Skydance. There is also a political story behind this

Warner's linear TV business also includes CNN, one of the most Trump-critical news channels in the USA. And the US President made it clear again just a few days ago where he stands on the channel. «I don't talk to CNN. It's fake news», he said at a press conference when a CNN reporter wanted to ask a question.

The connection: Paramount is backed by the Ellison family. And Larry Ellison is considered a close confidant of Trump. Critics fear that the editorial independence of CNN could also come under pressure under this umbrella. Trump had already announced in December that he would interfere in the regulatory review of the takeover - a highly unusual move.

A Netflix-Warner group would have primarily triggered competition law concerns because it would have created an unrivalled content monopoly. A Paramount-Warner construct, on the other hand, shifts the debate into the political arena. It's not just about market share in streaming, but about influence.

What does this mean for Hollywood?

Aside from market share and politics, there is a third dimension: jobs. Netflix CEO Ted Sarandos emphasised in his statement that Warner had been led as a «strong guardian of iconic brands» and that «jobs had been secured and created in the US production landscape». This is of course part of the negotiating rhetoric. But it is also an indication of where the concerns lie.

Paramount is backed by the Ellison family, a centre of power that is closely intertwined with Oracle - a company that is currently investing billions in AI infrastructure and positioning itself as the backbone of the global AI economy. What does this have to do with Hollywood? More than it seems at first glance.

When AI becomes the strategic core of a media group, it changes priorities. Automated post-production, AI-supported scripting, virtual sets, synthetic voices - much of this has long been technically possible and economically tempting. An owner with a strong focus on infrastructure and AI could exploit such rationalisation potential more consistently than a streaming service that lives primarily from creative content.

This does not mean that Paramount will automatically cut jobs en masse. But there is growing concern in Hollywood that efficiency could take precedence over creative culture under a more technology-driven umbrella.

Luca Fontana

Senior Editor

Luca.Fontana@digitecgalaxus.ch

I write about technology as if it were cinema, and about films as if they were real life. Between bits and blockbusters, I’m after stories that move people, not just generate clicks. And yes – sometimes I listen to film scores louder than I probably should.

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