In the Negotiation Campaign for Warner Bros., Did Paramount Lose the Plot?

In a consolidating media landscape, Warner Bros. (WB)—boasting HBO, CNN, and entertainment ranging from the Harry Potter franchise to Friends—emerged in 2025 as the industry’s most prized acquisition. In December, the powerhouse studio agreed to a nearly $83 billion buyout from Netflix, only for Paramount CEO David Ellison to launch a full-throttle negotiation campaign that culminated in a staggering $110 billion offer.

When Netflix backed out of the bidding war in February, Ellison scored an upset victory. But did Paramount win the prize or walk into a dangerous trap?

A Broader Lens on Negotiation

Paramount’s victory can be attributed in part to Ellison’s calculation that a WB acquisition involved more than just the parties at the table. In fact, mergers and acquisitions (M&A) deals and many other types of complex dealmaking require a coordinated negotiation campaign, according to Harvard Business School Professor James Sebenius. In a negotiation campaign, “a number of individual deals must be put together, often on multiple ‘fronts,’ to realize a larger result, typically an ultimate target agreement with sufficient support to make it sustainable,” writes Sebenius.

The Paramount deal marked “the culmination of a months-long campaign by Ellison to win over WB shareholders, regulators and the White House,” write Lucas Shaw and others in Bloomberg News.

Specifically, Ellison mapped backward—to use Sebenius’s terms—from his ultimate target, Warner Bros., to identify other parties that could influence a deal. That meant not only persuading WB shareholders that Paramount was the most attractive bidder but also convincing decision makers in Hollywood and Washington, DC, that a Netflix-WB deal would be anticompetitive—a regulatory nightmare.

Ellison and his legal team “flooded the zone with statements that Netflix and Warner Bros. viewed as misleading and at times incorrect but that the media, consumers and politicians were quick to amplify,” according to Bloomberg. Ellison also met with President Donald Trump, White House advisor Stephen Miller, U.S. senators, Democratic attorneys general, and French President Emmanuel Macron to make his case. In addition, Paramount pushed the U.S. Justice Department to expedite its review of the offer.

Doubts—and a New Deal

Ellison’s negotiation campaign succeeded in sowing bipartisan doubts about a Netflix-WB tie-up. Concerned about the possibility of a long regulatory battle, WB shareholders persuaded the company’s board to reopen talks with Paramount.

A new deal then came together quickly. The Ellison family and their financing partner, RedBird Capital Partners, committed to investing $47 billion in Paramount—and to taking on more than $70 billion in debt to do so.

A Surprising De-escalation

Expectations were high that Netflix would escalate the bidding war. But Netflix Co-CEO Ted Sarandos later told Bloomberg News, as soon as he and his team learned of the new Paramount offer, they knew they would exit the fight.

According to Sarandos, Netflix had modeled a variety of bidding scenarios in advance and decided how to respond to them, he told Bloomberg. They were not willing to deviate from the “very tight range that we’d be willing to pay.”

As compensation for its abandoned offer, Netflix secured a $2.8 billion breakup fee, paid by Paramount. It also scored a bump in its share price from investors, many of whom had viewed Warner Bros. as an ill-advised diversion from the streaming company’s core business.

“We definitely wanted this asset,” Sarandos told Bloomberg. “I still believe in all the positives [of acquiring Warner Bros.]. I just believed in them up to $27.75 a share.”

By contrast, he suggested that Paramount’s bid had been “unusual, irrational, whatever words you want to use.” He added, “I’ve never been a fan of midnight deal fever—auctions that people in the entertainment business like. . . . It seems pretty silly.”

Lessons from a Negotiation Campaign

Paramount may have run a successful negotiation campaign, but media mergers—including several involving Warner Bros.—have a long track record of failure.

Ellison insisted Paramount would keep the two studios independent and invest in them to produce more content. But the high degree of overlap between Paramount’s and Warner Bros.’ businesses—both own film and TV studios, streaming services, and cable networks—suggests that mass layoffs and cost cutting are forthcoming. In addition, while the Department of Justice has cleared a path for the merger, it may face scrutiny from state and European regulators.

More broadly, the following lessons emerge from this negotiation case study:

• Scope out the broader landscape. Look beyond the negotiating table to identify the range of parties who might influence your desired deal. Identify their key interests and lobby them to support your desired outcome (being sure to abide by your ethics).
• Avoid irrational exuberance. Lofty promises of creative synergy often collapse into crippling debt, debilitating culture clashes, and endless restructuring. It’s a cautionary tale for all dealmakers to temper their optimism.
• Beware the “winner’s curse.” In auctions and other forms of competitive bidding, the temptation to try to win the prize can be overwhelming—and often results in irrational overpayment. Take a page from Netflix’s playbook and analyze in advance how much you are willing to offer—and refuse to pay a dollar more.

What strategies have you used in a recent negotiation campaign?