Bidding, Backlash, and Blockbusters: The Battle for Warner Bros. Discovery

By: Aryn Chartock, Class of 2028

In a high-stakes clash for streaming supremacy, Netflix and Paramount are battling to acquire Warner Bros. Discovery (WBD).[1] While WBD previously favored Netflix’s offer, a reopening of discussions on February 17, 2026 granted Paramount a critical seven-day period to submit a final proposal for its acquisition of WBD.[2] As the February 23 deadline approaches, the competition  evolved from a bidding war into a complex calculation of structural and strategic risk.[3] Shareholders must weigh Paramount’s higher bidding price against the operational stability and strategic trajectory offered by Netflix.[4]

The Original Deal

In December of 2025, Netflix and WBD announced a definitive agreement where Netflix will acquire WBD.[5] The cash and stock transaction was valued at $27.75 per WBD share ($23.25 in cash and $4.50 in Netflix stock) with a total enterprise value of $82.7 billion.[6] The transaction was expected to close in Q3 2026, following a tax-free internal restructuring where WBD will split into two distinct entities.[7] According to co-CEO Ted Sarandos, the deal represented a pivotal step in Netflix’s strategy to secure a dominant position at the top of the international entertainment market.[8] Beyond the immediate payout, both companies considered the merger a definitive win for stakeholders.[9] The deal cited $2–3 billion in annual projected savings and promises shareholders a unified, strategic framework designed to provide greater value for the creative talent behind the industry’s most anticipated blockbusters.[10]

Paramount’s Hostile Bid

In a strategic effort to curb Netflix’s expanding market dominance, Paramount launched a hostile takeover bid to disrupt the existing Netflix-WBD agreement.[11] On January 12, 2026, Paramount announced its unique, all-cash tender offer of $30 per WBD share, totaling an enterprise value of $108.4 billion.[12]  A tender offer is a public proposal to buy shares of a corporation, usually at an above-market price and with the intention of gaining control in the target corporation.[13] Paramount’s public proposal aimed to buy WBD shares at a price exceeding Netflix’s offer, with the goal of gaining control of WBD.[14]

Paramount has a significant history of hostile takeover attempts, with its current hostile takeover bid mirroring landmark 1989 case, Paramount v. Time.[15] Then, the company interfered with a pending merger between Time Inc. (Time) and WBD by launching a last-minute, all-cash tender offer.[16] Similar to the conflict today, the Time board rejected the bid.[17] Time’s CEO, J. Richard Munro, characterized Paramount’s as an offer of “smoke and mirrors” for its hostile and deceptive nature.[18] Paramount’s latest maneuver forces the board into another high-stakes standoff, testing whether it can dismantle the existing Netflix deal.[19]

Paramount’s current bid serves as a bold statement to the entertainment industry and positions itself not just as a more aggressive and lucrative suitor, but as a necessary alternative for the "best interests" of the entertainment landscape.[20] Supported by smaller entertainment players, Paramount urged WBD to accept its offer as a safeguard against Netflix antitrust concerns.[21] Despite the higher price tag, WBD rejected Paramount’s bid, citing it as insufficient once adjusted for execution risks and costs.[22] Ultimately, WBD explained that Netflix’s deal offered greater financial certainty and a more expedited path to closing the merger.[23]

Netflix moved quickly to counter Paramount’s adversarial efforts. On January 20, 2026, Netflix amended its offer to an all-cash transaction, notably maintaining its $82.7 billion bid without an increase.[24] While the bidding process has been intense, WBD shareholders are positioned to profit in the long term. Under Netflix’s newly revised deal, WBD will reduce its debt by $260 million, accelerate its timeline to a stockholder vote, and provide overall greater financial certainty.[25]

The Current Standoff

The conflict reached a turn in early February, as Paramount communicated it would consider increasing its to a potential price of $32 or $33 per share if WBD reengaged.[26] Incentivized by this revised proposal, WBD agreed to reopen negotiations with Paramount on February 17, 2026.[27] Netflix granted Warner’s board seven days, via waiver, to discuss Paramount’s most recent proposal.[28] However, even on February 23^rd, the board’s decision will not end the battle.[29] If WBD sides with Paramount’s offer, Netflix will have the right to match the most recent offer to keep its existing agreement intact.[30] With the February 23 deadline approaching, tensions have reached an unprecedented level as the industry watches this high-stakes standoff.[31] As Netflix co-CEO Ted Sarandos noted, the waiver serves as a challenge to Paramount to “put their money where their mouth is.”[32]

Lawsuits and Antitrust Concerns

In the midst of this high-stakes bidding war, Netflix was hit with a consumer class-action lawsuit at the end of 2025 seeking to block the acquisition of WBD.[33] The complaint, filed in the Northern District of California, alleges that the deal threatens to reduce competition in the entertainment market.[34] The plaintiff, among many others in the entertainment industry, expressed fears that the acquisition would create a media giant with a virtual monopoly in entertainment and streaming services.[35] Under the agreement, WBD would sell its studios (Warner Bros. Television, Warner Bros. Motion Picture Group, DC Studios) and HBO MAX streaming business to Netflix, a move Netflix characterizes as combining two of the five largest Hollywood studios.[36] Critics argue this consolidation could lead to higher subscription fees, reduced content diversity, and the elimination of smaller industry players.[37] A representative from Entertainment Holdings Inc. and Regal Cineworld Group, added to the criticism, predicting the acquisition would be “culturally catastrophic.”[38]

The address these concerns, the plaintiff cites Section 7 of the Clayton Antitrust Act of 1914 in the complaint, which grants consumers the right to sue over mergers and acquisitions, separate from any federal regulatory agency lawsuit.[39] While Netflix has dismissed the suit as meritless, it represents the first wave of a massive backlash and significant antitrust litigation that could fundamentally reshape the future of the entertainment industry.[40]

Given the substantial antitrust concerns raised by Paramount, policymakers, and the entertainment industry, the federal government decided to intervene.[41] In an interview with NBC News, President Donald Trump said he intended to “stay out” of the clash between Netflix and Paramount, leaving the decision-making to the US Justice Department.[42] “There’s a theory that one of the companies is too big and it shouldn’t be allowed to do it, and the other company is saying something else,” Trump told NBC News when asked about the competing bids. “They’re beating the hell out of each other — and there’ll be a winner,” he added.[43]

On February 3, 2026, Netflix Chief Executive Officer Sarandos and Bruce Campbell, Chief Revenue and Strategy Officer at WBD testified before the US Senate Antitrust subcommittee.[44] Both Democrat and Republican Senators raised sharp concerns about competition, the potential price increases, and the long-term impact on the entertainment industry should Netflix successfully acquire WBD.[45] Sarandos testified that the merger would create more jobs and "give consumers more content for less,” with 80% of those who subscribe to HBO Max (WBD owned) also pay for Netflix.[46]

Senator Cory Booker expressed his concerns with the current battle, explaining that "with either merger, another corporation will have that increased control over what we see, what we hear and what news we consume.”[47] Many policymakers and government officials grow increasingly concerned with the battle between Netflix and Paramount, and it will be interesting to see if the Department of Justice will allow Netflix and WBD’s merger to proceed. As the regulatory backlash intensifies and the bidding wars continue to reshape the industry, the outcome of this clash will ultimately determine who controls the next era of global blockbusters.

Whether WBD goes to Netflix or Paramount, this acquisition represents more than just a change in ownership; it is a turning point for the development of media giants in the fast-growing entertainment industry.[48] Over this critical seven-day period, WBD board members must decide whether the higher bidding price or the bid with higher strategic certainty will win the battle.[49]

[1] Warner Bros. Discovery, Warner Bros. Discovery to Initiate Discussions with Paramount Skydance for Their Best and Final Offer (Dec. 17, 2026), https://www.wbd.com/news/warner-bros-discovery-sets-special-meeting-date-march-20-2026-and-unanimously-recommends.

[2] Id.

[3] Michelle Chapman & Wyatte Grantham-Philips, Warner Bros reopens takeover talks with Paramount after receiving a waiver from Netflix (Feb. 17, 2026), https://apnews.com/article/netflix-warner-bros-paramount-skydance-fb7d13e9adc09b82da0332d6278c9b96.

[4] Id.

[5] Netflix, Netflix to Acquire Warner Bros. Following the Separation of Discovery Global for a Total Enterprise Value of $82.7 Billion (Dec. 5, 2025), https://about.netflix.com/en/news/netflix-to-acquire-warner-bros.

[6] Id.

[7] Id.

[8] Id.

[9] Id.

[10] Id.

[11] Paramount, Paramount Provides Update to Warner Bros. Discovery Shareholders on Actions it is Taking to Advance its Superior $30 per Share All-Cash Offer (Jan. 12, 2026), https://ir.paramount.com/news-releases/news-release-details/paramount-provides-update-warner-bros-discovery-shareholders.

[12] Id.

[13] Legal Information Institute, Tender Offer (Mar. 2022), https://www.law.cornell.edu/wex/tender_offer.

[14] Id.

[15] Paramount Commc’ns, Inc. v. Time Inc., 571 A.2d 1140 (Del. 1990).

[16] Id.

[17] Id.

[18] Id.

[19] Paramount, Paramount Provides Update to Warner Bros. Discovery Shareholders on Actions it is Taking to Advance its Superior $30 per Share All-Cash Offer (Jan. 12, 2026), https://ir.paramount.com/news-releases/news-release-details/paramount-provides-update-warner-bros-discovery-shareholders.

[20] Id.

[21] Id.

[22] Id.

[23] Lillian Rizzo, WBD Once Again Rejects Paramount Offer in Favor of Netflix Deal (Jan. 7, 2026), https://www.cnbc.com/2026/01/07/wbd-rejects-paramount-offer-again-netflix-deal.html#:~:text=Follow%20your%20favorite%20stocksCREATE,push%20for%20the%20coveted%20assets.

[24] Dawn Chmieleweski, Netflix Will Now Pay All-Cash Offer to Keep Paramount at Bay (Jan. 21. 2026), https://www.nytimes.com/2026/01/20/business/netflix-warner-bros-discovery-paramount-takeover.html.

[25] Id.

[26] Michelle Chapman & Wyatte Grantham-Philips, Warner Bros reopens takeover talks with Paramount after receiving a waiver from Netflix (Feb. 17, 2026), https://apnews.com/article/netflix-warner-bros-paramount-skydance-fb7d13e9adc09b82da0332d6278c9b96.

[27] Id.

[28] Michelle Davis & Lucas Shaw, Warner Bros. Reopens Talks After Paramount Signals Higher Offer (Feb. 17, 2026), https://www.bloomberglaw.com/product/blaw/bloomberglawnews/bloomberg-law-news/X9EVDJJ4000000.

[29] Id.

[30] Id.

[31] Id.

[32] Id.

[33] Mike Scarcella, Netflix Faces Consumer Class-Action Over $82.7 Billion Warner Bros Deal (Dec. 9, 2025), https://www.reuters.com/legal/government/netflix-faces-consumer-class-action-over-72-billion-warner-bros-deal-2025-12-09/.

[34] Id.

[35] Thomas Buckley, Justice Department Probes Warner Sale’s Impact on Theaters (Feb. 18, 2026), https://www.bloomberglaw.com/product/blaw/bloomberglawnews/bloomberg-law-news/X4P9CSP0000000?bc=3ed25e10771dd15cfc42b62efbe55624&bna_news_filter=bloomberg-law-news&search32=aC4xlfTV8s4fp9L4Pz1dpw==c8qBhhplbS6ARUhrR3ofbJALqjEOI8oPtfXZxlBZAaWhI1eZQCM-2b1946hAa3tRK8U-LAnfZDqMKDNPOf02usN3OJ1NUWW1EUae62GLyxs=.

[36] Id.

[37] Id.

[38] Id.

[39] Id.

[40] Id.

[41] Hadriana Lowenkron, Trump Tells NBC He’ll Let DOJ Handle the Fight for Warner Bros. (Fe. 4, 2026), https://www.bloomberglaw.com/product/blaw/bloomberglawnews/bloomberg-law-news/X5IH21GS000000.

[42] Id.

[43] Id.

[44] Danielle Kaye, Netflix and Warner Bros Struggle to Defend Merger (Fe. 3, 2026), https://www.bbc.com/news/articles/c5ydndkmvy2o.

[45] Id.

[46] Id.

[47] Id.

[48] Id.

[49] Warner Bros. Discovery, Warner Bros. Discovery to Initiate Discussions with Paramount Skydance for Their Best and Final Offer (Dec. 17, 2026), https://www.wbd.com/news/warner-bros-discovery-sets-special-meeting-date-march-20-2026-and-unanimously-recommends.