The bidding war over Warner Bros. Discovery appears to have been won by Paramount. It has become a high stakes battle over shareholder value and rights, as well as the future of the U.S. movie industry in Hollywood. In the end, the storied studio is likely to go to the highest bidder. For a while, the WB board was pitted against the shareholders following last December’s hostile takeover bid by Paramount Skydance. And now there is absolute daylight between the two rivals. Big Tech Netflix is no longer willing to up the ante to buy Warner. Old Hollywood wins.

Paramount kept raising its offer, promising extra payments if the deal takes too long and even promised to cover a $2.8 billion fee Warner would owe Netflix if they were to walk away from that option. That pushed the Warner board over the edge. On. Feb. 26, they finally admitted the Paramount deal was better and safer for an antitrust probe, if and when it comes.

Paramount deal will likely come with less scrutiny

It came shortly after Netflix’s CEO Ted Sarandos traveled to Washington to better gauge the attitude inside the White House. This trip came shortly after President Donald Trump demanded Netflix kick ex-Obama National Security Advisor Susan Rice from its board of directors, “or pay the consequences” for saying Democrats would hound corporations that “bend the knee to Trump” once in power. 

Netflix has around $9 billion in the bank and could have matched Paramount’s $31 per share offer. By way of their original agreement with Warner Bros, Netflix had the right to match Paramount’s offer. Why did they decline? Whether or not politics played a direct role, the trip underscored the reality that a Netflix–Warner merger would face intense scrutiny in Washington. The Paramount deal had none of those anti-trust concerns.

Historically, the Department of Justice uses the Philadelphia National Bank 30% threshold legal test. If a merger results in a firm controlling 30% or more of a properly defined market, the merger is presumptively illegal. That doesn’t mean an automatic rejection by the DOJ, but it would have shifted the burden to Netflix to prove that buying Warner Bros. was not monopolistic. Netflix–Warner combination would likely have crossed that structural threshold in a properly defined streaming market. Paramount’s bid does not.

Paramount’s latest deal also promised a “ticking fee”: shareholders get $0.25 more per share for every quarter the deal takes to close past Dec. 31, 2026. If the deal drags on, shareholders could see hundreds of millions of extra dollars per quarter. They’ll love that. Paramount was always super serious about closing this deal fast and protecting investors if regulators slow the process. Their willingness to pay these fees signals it values Warner enough to keep their old studio system alive rather than letting it be sucked into the black hole of Big Tech. 

Warner was hoping Netflix would raise their offer of $27.75 per share offer. Warner’s stock price is already above that at $28.50 as of Monday’s close. The market rightfully assumes Netflix is out.

A total turnaround for Warner Bros.

Last week’s news was a complete turnaround from the recent past. 

Recall that WB Board Chair Samuel Di Piazza Jr. said in January that the Netflix deal was the stronger value and had a clear path through regulators. He also said it would give consumers more choice and protect jobs, something The Writers Guild of America and SAG-AFTRA actors’ union strongly contested. They feared it could hurt studio films and change how movies are made, reducing opportunities for creators and workers in California at a time when the industry is already struggling. Netflix was seen as more disruptive. Maybe a knock-out punch to those traditional Hollywood workers. (Writer’s Guild has now come out against the Paramount deal, too.)

California politicians are also worried about job losses in Hollywood. Sen. Adam Schiff and Rep. Laura Friedman asked Netflix and Paramount to commit to keeping and creating film and TV jobs in California. 

Regulatory risk was very real for Netflix. Think back to 2020, when Visa tried to buy Plaid for $5.3 billion. The DOJ sued and the deal fell apart. Visa was already big and regulators worried it would eliminate a competitor unfairly. Netflix faces similar scrutiny under U.S. antitrust law because it already dominates streaming.

Netflix has more than twice as many subscribers as Disney+ and it has raised subscription prices 29% to 39% since 2020, while still gaining viewers. Experts say its size gives it power to outbid rivals for content offer deals competitors can’t match and make it harder for others to compete. That’s why some saw the Netflix-Warner merger as the type of deal antitrust law was meant to prevent.

History shows small competitors can be worth more alone. After Visa walked away, Plaid, a data transfer network that powers fintech and digital finance products, raised funds at a $13.4 billion valuation—double Visa’s offer—showing the market valued it more as an independent company.

With Paramount, the competitive balance among traditional studios remains intact, rather than further concentrating power inside a single dominant streaming platform.

Creatives will have more buyers competing for on their wares. Recall that Hollywood A-list director James Cameron felt so strongly about this deal that he stuck his neck out knowing Netflix could punish him. Sarandos responded to his critique by calling Cameron “disingenuous” for his concerns about the future of the theatrical movie release.

Paramount is a traditional movie studio for over 100 years. The movie theater industry, led by publicly traded companies like AMC Theaters, has been hurt by streaming and Covid lockdowns. Movie theaters employed over 127,000 workers across 2,000 businesses in 2025, according to business intelligence firm IBIS World.

Warner Bros. shareholders are better off. On Feb. 26, Warner Bros. reported lackluster fourth quarter financials causing CNBC pundit David Faber to say “I don’t know why anyone would want to buy this company.” EBITDA fell 27% and revenue was down 12%. 

Warner Bros. has been in decline for years. It was on track to slowly die as a standalone studio. Someone would inevitably buy them. Netflix was instantly seen as a white knight. Regulators will still review the deal carefully, but structurally it presents fewer concentration concerns than the Netflix alternative. For now, the market is convinced that Paramount is the buyer with the clearer path forward.

Kenneth Rapoza is a veteran business and foreign economic affairs analyst who spent more than two decades as a staff journalist for The Wall Street Journal, Forbes and other leading publications.

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