Netflix Faces $3 Billion Penalty as U.S. Media Giant Reports Increased Losses Ahead of Paramount Acquisition

Warner Bros. Discovery, Inc. (WBD) reported first-quarter 2026 revenue of $8.9 billion, down 1% year over year, and a net loss of $2.9 billion, driven in large part by a $2.8 billion termination fee related to the canceled merger agreement with Netflix.

Although the streaming and studio segments showed growth, weakness in the global pay-TV business, combined with $1.3 billion of acquisition-related amortization, content fair-value adjustments and restructuring costs, pushed both operating cash flow and free cash flow into negative territory. Net debt remained at approximately $30.1 billion.

Facing $33.4 billion in total debt and a net leverage ratio of about 3.4 times, the company said it is restructuring its debt to improve its financial profile and fund its planned acquisition.

Recently, WBD sought bondholder consents for various series of senior notes issued by its subsidiaries Discovery Global Holdings and Discovery Communications. The request aimed to amend exchange terms and extend the exchange period for junior secured notes in connection with the proposed merger with Paramount Skydance. On May 22, holders representing a majority of the debt gave their consent, and on May 26 the company executed a third supplemental indenture.

Earlier, on April 23, WBD shareholders approved Paramount Skydance’s approximately $110 billion acquisition proposal. Once the deal closes, the companies plan to launch a unified streaming service combining HBO Max and Paramount+.

Warner Bros. Discovery is a leading U.S. media and entertainment group whose assets include HBO, Warner Bros. Studios and CNN. Amid its pivot to streaming and a heavy debt load, the company has been at the center of a bidding contest between Netflix and Paramount Skydance in 2026.

Industry observers believe that, once the merger with Paramount Skydance secures regulatory approval and is completed, it will significantly reshape competitive dynamics in the U.S. broadcast and streaming markets and alter the global content rights landscape.