Netflix shares dropped more than 8% Thursday after the company reported quarterly revenue of $12.25 billion that narrowly exceeded expectations, while signaling leadership changes and highlighting strategic shifts in the competitive streaming landscape.

In its earnings report, Netflix posted profit of $5.28 billion for the quarter, boosted in part by a $2.8 billion termination fee tied to its decision to walk away from a proposed acquisition involving Warner Bros. Discovery. The company determined the deal was no longer financially attractive and declined to increase its bid, effectively stepping aside as a rival offer backed by Paramount Global and Skydance moved forward.

The abandoned deal could have significant implications for the broader media landscape, as control of Warner Bros. assets, including major film and television properties and networks such as CNN, may shift depending on regulatory and shareholder approvals tied to the competing bid.

Investor sentiment appeared to turn negative despite the earnings beat, driven in part by uncertainty surrounding leadership changes. Co-founder Reed Hastings announced he will step down when his term as chairman concludes in June, marking another transition in the company’s executive structure. In a letter to investors, Hastings reflected on the company’s global expansion, calling its 2016 near-worldwide launch a defining moment.

Netflix also continues to face mounting competition in the streaming market from both traditional rivals and newer digital platforms such as TikTok, which compete for viewer attention with short-form content.

The broader corporate maneuvering around Warner Bros. Discovery has also drawn political attention. President Donald Trump has publicly indicated interest in the outcome, while Larry Ellison, a longtime Trump ally, has financially backed Skydance leadership in its bid. His son, David Ellison, leads Skydance and is involved in the competing acquisition effort.

Analysts noted that Netflix’s decision to step away from the deal could ultimately strengthen its financial position, allowing the company to redirect capital toward content production and expansion of its advertising-supported business model, even as near-term market reaction reflects investor caution.