Paramount Wins Bidding War For Warner Bros. After Netflix Drops Out

Late on Wednesday, we highlighted an aggressive options trade where a call spread buyer in Netflix options had bet $14 million that Paramount would end up buying Warner Brothers after Netflix walks, something which Polymarket had indicated very much since the start of this particular M&A saga…

Trader bets $14 million (via NFLX call spread) that Paramount will end up buying Warner. Polymarket agrees

cross-platform arbitrage? pic.twitter.com/lwxgAqPwz7

— zerohedge (@zerohedge) February 26, 2026

… and 24 hours that unknown trader is richer by about $40 million (and a guaranteed visit by the SEC), because late on Thursday,  Paramount emerged victorious in the fight to buy Warner Bros. Discovery after Netflix said it wouldn’t match the David Ellison-led company’s latest offer for the iconic Hollywood property. The news sent Netflix shares soaring 10% after hours, demonstrating what the market thought of the deal (not to mention $2.8 billion breakup fee). 

With the winds of political change shifting, and the DOJ making it very clear that it preferred Paramount to end up the winner in the contested race, Netflix – which would have had to move regulatory mountains to complete the deal – pulled the plug on its deal soon after the Warner board of directors said it determined Paramount’s $31-per-share offer for the entire company was superior to Netflix’s bid for Warner’s movie and television studios and HBO Max streaming service.

“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,” Netflix Co-CEOs Ted Sarandos and Greg Peters said in a statement. “This transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price,” the pair said. 

Assuming regulators approve, and they will, Paramount will own not only Warner Bros. and HBO, but also many popular cable networks including the nevertrump collective known as CNN, TNT, TBS and Food Network. The deal would represent a major ground shift for the entertainment industry, which is trying to adapt to seismic shifts in audience habits and technology.

“Once our Board votes to adopt the Paramount merger agreement, it will create tremendous value for our shareholders,” said Warner Discovery Chief Executive David Zaslav. 

As the WSJ notes, the culmination of the months-long process marks a stunning come-from-behind win for Paramount, whose overtures had previously been rebuffed at every turn by Warner. After multiple unsolicited bids from Paramount last year, Warner opened a sale process that ended with Netflix as the winning suitor. Netflix in December signed a deal to buy Warner’s studios and HBO Max for $27.75 a share, or $72 billion. Of course, anyone who had been paying attention, and sensed which way the political winds blow, would have known the outcome as far back as December.

Polymarket is now in the merger arb business. And it’s not looking good for Netflix pic.twitter.com/KGVwJDw2Lz

— zerohedge (@zerohedge) December 8, 2025

Shortly after, Paramount launched a hostile takeover effort, going directly to shareholders with a $30-per-share bid for the whole company, including the cable networks Netflix didn’t want.

When Ellison’s Skydance Media acquired control of Paramount last August, going after Warner became his top priority. Paramount was seen as too small to compete against deep-pocketed giants such as Disney, Netflix and Amazon.

Since announcing its deal with Warner, Wall Street has punished Netflix stock which lost over $170 billion in market value since last September, when Netflix was first seen – by those who don’t know how to read online betting markets – as a potential bidder for Warner, through this past week.

But then earlier this week, Paramount submitted its revised bid of $31 a share, or about $81 billion, just around the time Trump’s DOJ started sniffing around Netflix’s business model. The offer included an increased $7 billion termination fee that Paramount would pay if the transaction failed to close due to regulatory concerns. Paramount said it would foot the bill for the $2.8 billion breakup fee Warner would owe Netflix.

Additionally, Paramount accelerated the timing of its proposed “ticking fee” of 25 cents per share, which it would pay to Warner shareholders for each quarter its deal hasn’t closed, to start after Sept. 30 instead of in January.

Paramount’s latest bid came after Warner’s board of directors set a seven-day window for the companies to negotiate, which Netflix permitted.

In an amusing twist, wventually not only the DOJ – which was reviewing the deal – but lawmakers on Capitol Hill had also expressed concern about a combined Netflix-Warner having too much share in the streaming marketplace. As part of its investigation, the Justice Department was looking at whether Netflix has engaged in anticompetitive practices, The Wall Street Journal previously reported. Paramount’s deal would also face scrutiny from federal regulators. Paramount’s streaming business is smaller than Netflix’s, but the deal would also put two legacy movie and TV studios under one roof, along with multiple cable networks. Paramount has said it would target $6 billion in synergies (i.e. layoffs) from the deal.

Why was the twist amusing? Because while Democrats – both in the Hill and certainly in Hollywood, as actors were terrified they would face mass layoffs after a Netflix combination – hated the Netflix acquisition, they are about to hate Paramount, which is owned by Trump friend David Ellison, who also owns TikTok and, recently, CBS, even more. That’s because once the transaction closes, the company will add that unhinged far-left echo chamber known as CNN to a portfolio that already includes CBS News, effectively leaving the far left lunatic fringe with only MSNBC or whatever it’s called these days. 

Ellison has revamped CBS News since taking over Paramount. He installed Bari Weiss, the founder of the digital news and opinion outlet The Free Press, as editor in chief and has said he wants CBS News “to speak to that 70% of the audience that would really define themselves at center-left to center-right.” That particular transaction has so far been a disaster, with CBS losing countless viewers on both sides of the aisle as a result. 

In a memo to staff, CNN President Mark Thompson said “don’t jump to conclusions until we know more.”

Actually jump: “The idea that Paramount should be allowed to control CBS and CNN should be unthinkable,” said Craig Aaron, co-CEO of media advocacy group Free Press, adding that the new owner promised President Trump they would “make sweeping changes to CNN given the chance, and we know what that means.”

Yes we do: and to all the soon-to-be-fired CNN staffers we would suggest to “learn to code”, only that nowadays is an even more sure way of being unemployed than working at the CNN echo chamber.