Warner Bros. Discovery reported a first-quarter loss of $2.92 billion, or $1.17 per share, after recording a $2.8 billion charge for a termination fee owed to Netflix. The massive write-down dwarfed analyst expectations of an 11-cent per share loss, according to FactSet. The charge stems from a failed bidding war where Paramount Skydance ultimately beat Netflix to acquire Warner.

The termination fee was triggered when Paramount Skydance outbid Netflix with an $8.1 billion deal to acquire Warner. Although Paramount paid the fee, Warner must record it as an obligation because the amount would be refundable under certain circumstances. The overall loss also included $1.3 billion in pre-tax acquisition-related amortization of intangibles, content fair value step-up and restructuring expenses.

The deal marks a significant shift in the media consolidation landscape, with Paramount Skydance securing Warner over Netflix's competing offer. The substantial loss highlights the financial complexities of failed merger negotiations and the accounting treatment of termination fees that may be subject to refund provisions.