Paramount Skydance has paid Netflix a $2.8 billion breakup fee, officially ending Netflix's planned acquisition deal with Warner Bros. Discovery (WBD) and clearing the path for Paramount's superior bid to acquire WBD.
Netflix disclosed the payment in an SEC filing on Friday. The fee was transferred by Paramount Skydance (PSKY) on behalf of WBD as required under the terms of the terminated merger agreement between Netflix and WBD.
This development follows a heated bidding war for Warner Bros. Discovery's assets. Netflix had an existing merger agreement with WBD, but Paramount Skydance submitted a revised all-cash offer valued at $31 per share, which WBD's board deemed a "Company Superior Proposal."
To facilitate the switch, Paramount agreed to cover the $2.8 billion termination fee that WBD would have owed Netflix upon breaking the deal.
Reports indicate Netflix's stock rose notably (with some accounts citing gains around 14% or more in recent trading) following the announcement, reflecting investor views of the fee as a strong non-operating windfall for the streamer.
This marks the conclusion of Netflix's pursuit of WBD assets, which began as a partial acquisition bid but evolved amid competing offers. Paramount's victory strengthens its position in the consolidating media landscape, combining forces with Warner Bros. Discovery while Netflix exits with a substantial payout.
The rapid sequence of events underscores the intense M&A activity in the entertainment sector as companies reposition amid streaming competition and shifting market dynamics.