Netflix drops bid for Warner Bros, clearing way for Paramount takeover

Netflix has abandoned its pursuit of Warner Bros Discovery after Paramount Skydance raised its offer to $31 per share, ending a months-long bidding war that will reshape Hollywood's power structures. The streaming giant's withdrawal leaves CNN poised to fall under the control of a company with conspicuous ties to Donald Trump's inner circle. The proposed takeover values Warner Bros at roughly $92bn including debt, according to analyst estimates.

What makes this particular consolidation noteworthy isn't just the price tag. The deal would transfer ownership of CNN to a company whose path to this moment required settling Trump's $16m lawsuit against CBS News. Paramount is backed by tech billionaire Larry Ellison, among the Republican Party's most generous donors, whilst its initial hostile bid was supported by Trump's son-in-law Jared Kushner.

The Settlement That Cleared The Path

Paramount's ability to complete its 2025 merger with Skydance hinged partly on navigating Trump administration scrutiny at the Federal Communications Commission. Among the concessions: a $16m settlement on behalf of CBS News to resolve Trump's lawsuit over a "60 Minutes" interview with Kamala Harris. The president had claimed the programme's editing constituted election interference.

That settlement, followed by leadership shake-ups and redundancies at CBS News, offers a preview of how Paramount responds when Trump applies pressure.

The company demonstrated it was willing to pay substantial sums and restructure news operations to secure regulatory approval for its ambitions. Netflix's co-chief executives Ted Sarandos and Greg Peters described their decision to walk away as simple financial discipline. They said in a statement released hours after Sarandos visited the White House on Thursday that the transaction was always a "nice to have" at the right price, not a "must have" at any price.

The timing raised eyebrows, though neither party has suggested the visit was connected to the Warner Bros decision. The December agreement between Warner Bros and Netflix would have separated CNN and traditional television networks into a standalone entity, keeping the news operation at arm's length from Hollywood's streaming wars. Paramount's all-in offer eliminates that firewall entirely.

Regulatory Scrutiny Just Beginning

California Attorney General Rob Bonta made clear on Thursday that the deal faces substantial obstacles. 'These two Hollywood titans have not cleared regulatory scrutiny,' he wrote, noting his office maintains an open investigation into the transaction. He had previously flagged the entertainment industry as a 'critical sector' warranting careful review of any major consolidation.

The merger still requires approval from the US Department of Justice and European regulators, neither of whom have indicated their positions. Both agencies have shown increased willingness to challenge media consolidation in recent years. The current administration's approach remains less predictable given the political connections at play.

CNN head Mark Thompson sent an email to staff urging them not to 'jump to conclusions about the future until we know more', according to US media reports. That's rather like asking journalists not to notice the obvious. Trump has attacked CNN repeatedly, calling its leadership 'corrupt or incompetent' and specifically stating in December that he believed the network should be sold as part of any Warner Bros transaction.

The president's preference appears to be materialising, with the news operation moving to owners who have already demonstrated their willingness to accommodate his demands through financial settlements and organisational restructuring.

Hollywood's Uncomfortable Consolidation

David Ellison welcomed Warner Bros' board decision in favour of Paramount's revised offer, describing it as providing 'superior value, certainty and speed to closing'. The proposal includes substantial protections: Paramount has agreed to pay $7bn should the deal collapse and will cover the $2.8bn termination fee Warner Bros owed Netflix.

If approved, Paramount would absorb HBO Max's subscriber base into its streaming portfolio whilst taking control of CNN, the Food Network, and various sports properties. Combined with Paramount's existing networks including Nickelodeon, CBS and Comedy Central, the merged entity would command substantial influence across news, entertainment and children's programming.

The scale of that concentration explains why observers across Hollywood's political spectrum view this consolidation with unease. Netflix's Silicon Valley approach to content threatened to diminish theatrical releases and traditional studio culture. But Paramount's political entanglements raise different concerns about editorial independence, particularly for a news organisation that covers the same administration whose allies control its parent company.

Warner Bros' sale will trigger redundancies across an industry already battered by production cutbacks. The merged entity's leadership has made no commitments about preserving current staffing levels at either the entertainment or news divisions.

Whether regulators view Paramount's political connections as relevant to their review remains uncertain. What's clear is that one of America's most prominent news organisations is about to change hands in a transaction structured partly around settling the sitting president's lawsuit, backed by his major donors, and initially supported by his son-in-law. The regulatory approval process will test whether those facts matter in 2025's media landscape.