Netflix Steps Aside in Warner Bros. Discovery Battle, Paramount-Skydance Bid Faces Employee Unease and Regulatory Hurdles

The takeover saga surrounding Warner Bros. Discovery entered a new phase Thursday after Netflix said it would not raise its $27.75-per-share offer, effectively clearing the path for Paramount Global and Skydance Media to advance a revised $31-per-share all-cash bid.

The WBD board earlier determined that Paramount’s sweetened proposal represented a superior offer. Netflix had four business days to counter but declined, opting instead to collect a $2.8 billion breakup fee triggered by the higher bid.

Markets reacted decisively. Netflix shares surged more than 10% in extended trading, signaling investor approval of capital discipline over escalation. Paramount rose as much as 5%, while Warner Bros. Discovery slipped 1.39%, suggesting diminished expectations of a renewed bidding contest.

WBD Chief Executive David Zaslav said Thursday the Paramount agreement would create “tremendous value” for shareholders once formally adopted by the board. But inside Warner Bros. Discovery, the mood appears more complicated.

Shareholder Premium vs. Workforce Anxiety

While some investors — including employees who own WBD stock — may prefer the financial clarity of Paramount’s $31-per-share bid over Netflix’s lower offer, concerns are mounting internally about what a merger would mean operationally.

CNBC spoke to 10 Warner Bros. Discovery employees across various roles. Each expressed concern about possible job losses and uncertainty over who would ultimately lead divisions if Paramount and WBD are combined.

“It’s fair to say people are deflated by the news,” said one long-term WBD executive, who spoke anonymously.

The anxiety stems in part from overlap. Paramount and WBD both operate in news, sports, theatrical film, and streaming television — segments where consolidation typically produces cost synergies through workforce reductions and structural integration. By contrast, Netflix’s business model overlaps far less with WBD’s legacy cable networks and news divisions.

Ted Sarandos, Netflix’s co-CEO, had repeatedly indicated that under a Netflix deal, WBD’s theatrical studio would remain distinct and HBO Max would continue operating as an independent streaming service. Several employees told CNBC they preferred that scenario, viewing it as less disruptive to existing leadership structures and brand identities.

Paramount’s integration, by contrast, would almost certainly involve rationalizing duplicative operations across studios, marketing, distribution, and back-office functions — a process that typically results in headcount reductions.

Regulatory and Political Crosscurrents

Despite the board’s designation of Paramount’s proposal as superior, the transaction is far from certain.

“A WBD-Paramount merger is not a done deal,” California Attorney General Rob Bonta said Thursday, highlighting the regulatory scrutiny that would accompany such a consolidation.

The deal must secure approval from regulators in both the United States and Europe, where authorities have adopted a more assertive posture toward large media combinations. A merged Paramount–Warner Bros. Discovery entity would command a vast content portfolio spanning film studios, cable networks, broadcast television, and streaming platforms — raising potential antitrust questions around market concentration in content production and distribution.

Zaslav acknowledged that uncertainty during an all-hands meeting on Friday. According to leaked audio obtained by Business Insider, he told employees, “The deal may not close. If it doesn’t close, we get $7 billion, and we get back to work.”

He also expressed sympathy for staff experiencing what some described as whiplash — shifting from a potential Netflix acquisition to a Paramount merger within days.

The $7 billion figure refers to a termination fee structure embedded in the agreement, which would provide a financial cushion if regulators block the transaction.

The outcome of this contest will help shape the next chapter of media consolidation. Traditional studios are grappling with declining linear television revenue, plateauing streaming growth, and escalating content costs. Scale offers leverage in negotiations with advertisers, distributors, and talent, as well as cost efficiencies in production and technology.

For Paramount and Skydance — backed by Larry Ellison and David Ellison — acquiring Warner Bros. Discovery would create a diversified media powerhouse with global reach. For Netflix, walking away reinforces its strategic focus on organic growth, advertising expansion, and disciplined capital allocation.

Investors appear to favor that restraint. Employees, however, are weighing a different calculus — one shaped less by per-share premiums and more by organizational survival and leadership continuity.