WBD · 10-Q · 2026Q2 · Full report

Netflix Termination Fee

Warner Bros. Discovery, Inc. · 2026-08-06 · Importance 71 · Surprise 60 · Contradicted

On February 27, 2026, WBD terminated the Netflix Merger Agreement after receiving a Company Superior Proposal from Paramount Skydance Corporation, and PSKY paid Netflix a $2.8 billion termination fee on WBD’s behalf. WBD entered into the PSKY Merger Agreement under which each WBD Series A common share would receive $31.00 in cash plus ticking consideration of up to $0.25 per 90-day period after September 30, 2026. WBD stockholders approved the transaction on April 23, 2026, but lawsuits filed in July 2026 by twelve state attorneys general and the Writers Guilds seek to block the merger under Section 7 of the Clayton Act. Specified termination circumstances could require WBD to pay PSKY a $3.0 billion termination fee and reimburse up to $1.528 billion for the Junior Lien Exchange Offer plus the Netflix Termination Fee, while PSKY could owe WBD a $7.0 billion termination fee.

Key facts

• Netflix Termination Fee recorded in six months ended June 30, 2026: $2,800 million expense. source
• The amount paid by PSKY is reimbursable by the Company to PSKY in certain circumstances and has been recorded in accrued liabilities in the consolidated balance sheets. source
• Following determination that the Company received a Company Superior Proposal from PSKY and Netflix’s waiver, on February 27, 2026 the Company terminated the Netflix Merger Agreement and PSKY paid Netflix a $2.8 billion termination fee in cash; the amount paid by PSKY is reimbursable by the Company to PSKY in certain circumstances and has been recorded in accrued liabilities. source
• On February 27, 2026, PSKY, on behalf of the Company, paid Netflix a termination fee of $2.8 billion in cash. source
• During the six months ended June 30, 2026 the Company recorded a Netflix Termination Fee accrual of $2,800 million in operating cash flow adjustments. source
• The Netflix Termination Fee of $2,800 is shown in the reconciliation of segment adjusted EBITDA to loss before income taxes. source
• On January 19, 2026 the Company entered into an amended and restated Netflix Merger Agreement under which Netflix would have acquired the Streaming and Studios segments and certain other assets, including the Company’s film and television studios, HBO Max, and HBO, following the Separation Transaction. source
• In the first quarter of 2026, the Company recorded an expense for the Netflix Termination Fee in the consolidated statements of operations. source

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