Paramount Skydance‘s hostile move to outbid Netflix for control of Warner Bros. Discovery has paid off.
But here’s something interesting: After Netflix officially bowed out of its proposed deal to buy Warner Bros., its stock rose.
We’ll get into why, but first the background deets: Netflix announced last December that it planned to buy Warner Bros. Discovery in a deal valued at $82.7 billion, aka $27.75 per share. It was set to be a sort of full-circle moment and evolution for Netflix, which got its start in 1997 as a DVD rental service doling out Hollywood movies by mail, and now has become one of the biggest producers of original streaming content on the ‘net.
Subscribe to get the latest creator news
Being in that position puts it in competition with both traditional Hollywood and YouTube–which, according to Nielsen, has been the most-watched streaming service in the U.S. for three years running. Netflix isn’t happy about that, and though it called on YouTube’s impressive viewership stats to defend itself from accusations of monopoly with the Warner Bros. buy, it clearly hoped acquiring a legacy Hollywood studio would help give it an edge over its UGC-driven competitor.
In the end, though, the price was just too high. Paramount Skydance’s winning offer came in at $31/share, or around ~$111 billion.
“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 the Paramount Skydance bid,” Netflix said in a statement.
Paramount Skydance (which itself is the end result of an $8 billion merger between Paramount Global and Skydance Media that closed in August 2025) expects to wrap up the deal by Q3 of this year, pending regulators’ approval. If it does close, it’ll bring currently competitive streaming services HBO Max and Paramount+ under one roof, as well as news orgs CNN and CBS. Will that trip regulators’ wires enough to stop the deal from going through? Who knows, in this day and age.
Now back to what we mentioned about Netflix’s stock rising. You might expect that when a company loses a fight to absorb one of its legacy rivals, its stock prices would sink.
But here’s the thing: Netflix’s investors were never thrilled with its Warner Bros. pursuit. After the streamer’s last quarterly earnings call, where it laid out plans to splash big on the acquisition and, on top of that, increase spending on programming by 10% in 2026, stock prices dipped. Investors’ concerns about Netflix overextending by paying $20 billion this year for things like live sports events and podcasts were only amplified by the company’s determination to spend further tens of billions on bringing Warner Bros. Discovery into its fold.
So, with the threat of that pricey merger gone, investors breathed a sigh of relief, and Netflix’s stock rose 13%.
An advisor familiar with the matter told Reuters they had previously instructed Netflix to bow out of the bidding war, because the price Paramount Skydance was willing to pay was “irrational.”
“There’s no point in playing chicken with someone who won’t turn the wheel,” they said.
eMarketer analyst Ross Benes also praised Netflix’s decision to clear the table: “Netflix is the biggest winner in the Warner Bros Discovery sweepstakes. Netflix earns a termination fee paid by Paramount. By driving a bidding war, Netflix raised the price Paramount had to pay, which will ultimately burden Paramount-WBD with more debt,” he said.
Meanwhile, Paramount Skydance is celebrating its successful bid.
“Once our board votes to adopt the Paramount merger agreement, it will create tremendous value for our shareholders,” David Zaslav, CEO and President of Warner Bros. Discovery, said in a statement. “We are excited about the potential of a combined Paramount Skydance and Warner Bros Discovery and can’t wait to get started working together telling the stories that move the world.”
What does this ultimately mean for our bread and butter, YouTube? YouTube was only peripherally involved in all this because of Netflix’s ‘no, really, we’re not a monopoly’ invocation. Sure, this deal has still ultimately ended with multiple competitor streaming services coming together–but even together, they won’t challenge YouTube for watch time.
And the true reason Netflix still locks horns with YouTube isn’t because of its watch time, or because it produces huge IPs like Stranger Things. It’s because Netflix views YouTube as a talent “farm league” and will continue to shamelessly poach successful creators after they’ve spent years building an audience there. Whether it can actually pull those audiences over to its own platform to watch original content from creators like Salish Matter remains to be seen.
