The entertainment industry is witnessing an unprecedented acquisition battle as Paramount Skydance launches a hostile takeover bid to reclaim Warner Bros. Discovery, just days after the company accepted Netflix’s acquisition offer. What was once a seemingly settled deal has transformed into a contentious multi-billion dollar showdown that will reshape the media landscape.
Netflix’s Initial Victory
Last week, Netflix announced it had secured an agreement to acquire Warner Bros. Discovery in what appeared to be a landmark transaction. The streaming giant’s winning offer valued the movie operations and HBO Max at $72 billion, translating to an enterprise value of $82.7 billion. This announcement came as a shock to many industry observers who had anticipated Paramount would be the frontrunner in any acquisition discussion.
The Netflix deal structure included $27.75 per share for Warner Bros. and HBO, comprising $23.25 in cash and $4.50 in stock. Notably, Netflix’s offer excluded WBD’s valuable cable assets, including CNN, TNT, and TBS, which the board believed would unlock greater shareholder value through a subsequent spinoff strategy.
Paramount’s Counteroffensive
Undeterred by Netflix’s victory, Paramount Skydance has responded with an audacious all-cash tender offer aimed directly at Warner Bros. Discovery shareholders. The bid represents the same proposal Paramount submitted on December 1st that the board had previously rejected—$30 per share for the entire company, not just selective divisions.
This comprehensive offer stands at an enterprise value of $108.4 billion when accounting for all of WBD’s outstanding debt. By pursuing the entire corporation rather than cherry-picking assets, Paramount argues it delivers superior value. The company claims its all-cash proposition provides shareholders with $17.6 billion more cash than the Netflix alternative, offering clarity and certainty compared to Netflix’s mixed equity-and-cash structure.
The Financial Backing
Paramount’s aggressive pursuit of the acquisition is bolstered by formidable financial support. Oracle co-founder and Paramount Skydance CEO David Ellison’s father, Larry Ellison, is personally contributing equity to finance the bid. The company has also secured substantial backing from international investors, including Saudi Arabia’s Public Investment Fund, Qatar, and Abu Dhabi.
Domestic financial institutions are equally committed to the transaction. Bank of America, Citi, and Apollo Global Management have collectively committed $54 billion in debt financing. Additionally, RedBird Capital Partners and Affinity Partners, which counts significant Saudi sovereign wealth fund investments, are participating in the financing structure. To circumvent potential national security concerns, foreign entities have agreed to refrain from taking board seats or voting their equity stakes should the deal proceed.
Paramount’s Strategic Argument
In his public appeal to shareholders, David Ellison contends that Paramount’s offer transcends simple financial mathematics. He argues that the all-cash structure eliminates the uncertainty inherent in Netflix’s proposal, which includes equity components whose future value remains speculative. Furthermore, Ellison emphasizes that accepting Netflix’s offer would expose shareholders to the complexity of a spinoff process and uncertain regulatory approval timelines.
Ellison has positioned Paramount’s bid as providing “a more certain and quicker path to completion” while highlighting potential legal obstacles that could derail the Netflix transaction. He specifically points to antitrust concerns, arguing that combining Netflix, already the dominant streaming service, with HBO Max would create an anticompetitive behemoth that regulatory authorities might reject. He has leveraged his relationship with President Donald Trump, suggesting the administration would view such consolidation unfavorably and believes the President supports competition in the marketplace.
Netflix’s Counterargument
Netflix maintains that its offer provides superior ultimate value for shareholders despite Paramount’s larger headline figures. The streaming giant asserts that WBD’s cable assets, when spun off independently, will generate several dollars per share in additional shareholder value. This strategic separation would unlock the genuine worth of cable operations, which analysts have long argued perform better as standalone entities rather than subsidiaries of a film studio and streaming service.
Netflix also challenges Paramount’s antitrust claims. Using Nielsen’s measurement methodology, Netflix demonstrates that it commands only 8% of total television usage time, slightly behind Paramount’s 8.2%. By this metric, Netflix ranks sixth in the overall market, with YouTube and Disney commanding greater shares. The streamer contends that combining with HBO Max would not create the anticompetitive problem Paramount alleges.
Market Reaction and Implications
The market has responded vigorously to Paramount’s counter-bid. Warner Bros. Discovery shares surged 7% to nearly $28 per share on Monday as investors anticipated a bidding war. Paramount’s stock rose 4%, while Netflix fell more than 3%, reflecting market sentiment regarding the acquisition battle’s prospects.
Should Paramount ultimately prevail, Warner Bros. Discovery would be required to pay Netflix a $2.8 billion breakup fee—a substantial penalty that further complicates the financial calculations for all parties involved.
A Broader Vision for Hollywood
Beyond the immediate acquisition battle, Paramount’s offer reflects Ellison’s broader vision for reinvigorating the entertainment industry. He contends that Netflix’s acquisition would represent “the death of the theatrical movie business in Hollywood” by consolidating streaming dominance at the expense of theatrical exhibition. Paramount promises to invest in theatrical distribution, committing to produce 30 movies annually exclusively for cinema release.
Ellison has also outlined ambitious plans to create a scaled news operation by combining CBS News with CNN, positioning this merged entity as a trusted information source for mainstream Americans. He envisions Paramount as a balanced competitor to Netflix and Disney, one that would strengthen rather than weaken the creative community and maintain healthy competition within the entertainment ecosystem.
The Road Ahead
With the battle now playing out before shareholders rather than boardrooms, the outcome remains uncertain. Paramount’s direct appeal to stockholders circumvents the WBD board’s previous decision, introducing a potentially disruptive variable into an otherwise settled transaction. Industry observers anticipate that Netflix may respond with an enhanced counter-offer, intensifying what has become Hollywood’s most significant corporate battle in recent memory.
The resolution of this acquisition battle will determine not only which company controls one of entertainment’s most valuable properties but also the future trajectory of streaming, theatrical releases, and media consolidation in the years ahead.
