Paramount Paid $2.8 Billion Breakup Fee on Warner’s Behalf in February
Key Facts
Paramount Skydance paid Netflix a $2.8 billion breakup fee on February 27, 2026, on behalf of Warner Bros. Discovery, as Warner ended its merger agreement with Netflix and entered into an agreement with Paramount, according to a Netflix filing with the U.S. Securities and Exchange Commission. That means the amount was not a new payment in November, but part of Warner’s move to a competing offer in February. The filing said Warner ended its agreement with Netflix to enter into a merger agreement with Paramount over what the company viewed as a “superior proposal.” Paramount paid the fee on Warner’s behalf when the agreement was terminated, according to the filing. These details place the financial obligation in the context of the acquisition process that ended with Netflix exiting the contest for Warner.
Paramount’s revised offer, announced on February 24, 2026, included buying Warner shares for $31 in cash per share, along with a $7 billion regulatory termination fee if the deal failed for regulatory reasons. Paramount also pledged to pay Warner’s $2.8 billion Netflix termination fee. Warner said in its filing that the $31 cash consideration represented a premium of about 147% to the unaffected share price of $12.54 on September 10, 2025. It added that the price represented a 124% premium to the highest unaffected share price in the 52 weeks through that date. These terms show the scale of Paramount’s increase over Warner’s share price before reports of its offer emerged, while the offer also carried a separate obligation if regulation prevented its completion.
The offer followed a strategic review that included outreach to 13 potential parties, according to Warner’s merger proxy filed with regulators. Four parties signed confidentiality agreements, while three submitted final offers. After Warner’s board deemed Paramount’s latest offer superior, Netflix declined to raise its bid, according to The Associated Press. Netflix said the new price it would have had to pay made the deal “financially unattractive.” Co-Chief Executive Officers Ted Sarandos and Greg Peters described the acquisition as “desirable at the right price, not a must-have at any price.”
Paramount said in its filing that it borrowed $2.15 billion under its credit facility during the first quarter of 2026 in connection with paying the termination fee. It added that the payment was initially funded with available cash and borrowings, and that its ultimate funding would come from the expected $46.7 billion it would receive from the Ellison parties. In its first-half financial statements, the company included the amount as “consideration paid in advance for the acquisition of Warner” on its June 30 balance sheet and classified it under investing activities in its cash flow statement for the period ended on the same date. On that date, Paramount reported $1.6 billion in cash and cash equivalents, against total debt of $15.2 billion. These disclosures link the fee to the financing of the Warner deal and the accounting treatment Paramount reported during the first six months of the year.
In the market, Netflix shares ended the February 27 session up about 14%, after investors welcomed the company’s decision to withdraw from the Warner contest, according to Reuters. The rise came on the day the merger agreement was terminated and the fee was paid, not when news of a new payment surfaced in November. After Paramount and Warner announced their agreement, The Associated Press reported that the deal still required approval from Warner shareholders and regulators, and that the U.S. Department of Justice had begun its reviews. That places the fee within a deal facing a regulatory approval process alongside its financial terms. Those reviews were the next step cited in coverage at the time of Warner’s move to an agreement with Paramount.