This analysis was first published in SvD Näringsliv, in Swedish, on February 27th, 2026. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.
Netflix gives up on buying HBO and its parent company Warner Bros Discovery. A new major streaming giant is being created in the US instead. But despite the loss, Netflix comes out the winner.
Sometimes you win in business even when it looks like you’re losing.
Netflix is experiencing that right now.
Late on Thursday came the news that the Warner Bros Discovery board had changed its mind. In December, they agreed to sell the digital parts of their company — including HBO — to Netflix for 83 billion dollars, including debt. A good deal for all involved, many analysts thought.
One party was, however, very unhappy: Paramount Skydance, the other bidder in the process. And they made clear to Warner Bros from the start that the match was far from over.
They revised the bid structure. Changed the terms. Increased the amount of money.
In the end, it was enough for the Warner Bros board to switch sides and sell to Paramount instead. But Netflix leaves the deal as a winner — in several ways.
When making deals of this calibre, there are many things that can go wrong. All three companies are listed on the stock exchange, which means one must follow all applicable rules. Get enough unhappy shareholders and the process alone can become messy and take a long time.
After that, the deal must be approved by regulators. That too can drag on, and does not always end up as planned. The purpose is for authorities to ensure that competition in the market functions as it should. In this particular case, however, it is likely to proceed smoothly, as Paramount stands close to the Trump administration.
To give both parties some certainty, a so-called “breakup fee” is usually set. This means that if either party pulls out, or if the deal is not approved, one party must pay the other a large sum of money. It functions like an insurance policy.
As a consolation prize for Warner Bros pulling out, Netflix will therefore receive 2.8 billion dollars — around 25 billion kronor — as a breakup fee. Not bad for a few months of negotiation. And to make it even better for Netflix — as part of the negotiation, Paramount Skydance has agreed to pay the penalty out of its own pocket.
The question one might ask is why it is so important for Paramount to own Warner Bros? To such a degree that they are now paying 31 dollars per share for a company that was trading at around 12 dollars last autumn?
It is primarily about company size, and how quickly one can get to becoming a giant player.
The biggest in the streaming category is Netflix. That is the company everyone else is chasing right now. And after a market that for several years consisted of a myriad of small streaming services, the prevailing strategy is the opposite. There should be few — and large — services.
Netflix cannot be bought, and nor can Disney+, Apple TV+, or Amazon Prime Video. The list of possible acquisitions if you want to become a new giant is very short. And right at the top of it was Warner Bros Discovery. That is why this purchase became so important for David Ellison, CEO of Paramount Skydance. How else could he compete with the other massive rivals?
And so it became expensive. Paramount Skydance is a company that loses money and already has large debts following its first major acquisition — in the summer of 2024, they bought the company they subsequently took their name from: Paramount.
On the debt side, things are getting substantially worse for Paramount Skydance. They are buying Warner Bros with money they do not have. Even before this deal, they had around 124 billion kronor in debt. And now they need to cough up a further 1,000 billion kronor to pay for the new deal. All while the underlying business is bleeding.
That headache is David Ellison’s to solve going forward. Perhaps with the help of his father, Larry Ellison, the founder of the database company Oracle — and one of the world’s wealthiest people.
Netflix emerges from this as a winner in many ways. As noted, they receive a large bag of money without really having to do very much. They now have a larger competitor in Paramount Skydance, but one that has almost certainly overpaid for its new asset. The money Netflix didn’t have to spend can be invested elsewhere.
The final bonus was delivered yesterday, after the market had closed. When it emerged that Netflix had lost the deal over Warner Bros, their share price jumped more than seven percent immediately. Netflix’s market capitalisation thereby increased by 225 billion kronor on the strength of that news alone.
Sometimes, as noted, it is good to lose deals, after all.
