Paramount Skydance on Monday launched a hostile $108.4 billion bid for Warner Bros Discovery in an effort to outbid Netflix and build a media giant to challenge streaming dominance. The offer follows Netflix’s $72 billion equity proposal for Warner Bros Discovery’s film and TV studios, HBO and HBO Max, which had been viewed as the frontrunner after weeks of bidding.
Warner Bros Discovery’s board said it would review Paramount’s proposal but did not change its recommendation in favor of Netflix, advising shareholders to “take no action at this time” regarding the Paramount Skydance bid.
Paramount’s $30-per-share all-cash offer is financed in part by Affinity Partners, the investment firm run by Jared Kushner, and includes commitments from Saudi and Qatari sovereign wealth funds and L’imad Holding Co (owned by the Abu Dhabi government). The Ellison family agreed to backstop $40.7 billion in equity capital; Larry Ellison, father of Paramount head David Ellison, is reported to have called President Trump after the Netflix deal was announced and warned it would hurt competition, the Wall Street Journal reported.
Paramount argues its bid gives Warner Bros Discovery shareholders $18 billion more in cash than Netflix’s proposal and offers an easier path to regulatory approval because it would acquire the entire company, including cable television assets that Netflix’s bid excludes. Paramount says a combined Paramount-Warner would benefit the creative community, theaters and consumers by boosting competition. “We believe our offer will create a stronger Hollywood,” Paramount CEO David Ellison said, calling the proposal “higher headline value, increased certainty in that value, greater regulatory certainty, and a pro-Hollywood, pro-consumer and pro-competition future.”
Analysts and lawmakers noted antitrust risks: a Paramount-Warner consolidation would combine two major TV operators and could create a studio larger than Disney. Last month, Democratic senators warned such a deal would place “one company controlling almost everything Americans watch on TV.” Senator Elizabeth Warren called the bid “a five-alarm antitrust fire” and criticized its backers as “a who’s who of Trump buddies,” citing concerns about influence-peddling and national security.
Netflix co-CEO Ted Sarandos said Paramount’s hostile bid was “entirely expected” and defended Netflix’s approach, arguing Paramount’s claimed $6 billion of synergies would likely come from job cuts. “So we’re not cutting jobs. We’re making jobs,” he said at a UBS conference.
Paramount said it had submitted six proposals over 12 weeks and accused Warner Bros Discovery of failing to engage meaningfully and of predetermining Netflix as the winner. Warner management reportedly called the Netflix deal a “slam dunk” while downplaying Paramount’s bid. David Ellison told CNBC there was an “inherent bias” in the bidding process.
The offer represents a roughly 139% premium over Warner Bros Discovery’s pre-talk value and tops Netflix’s $27.75-per-share mix-of-cash-and-stock offer. Market reaction on Monday showed Paramount shares up 7.3%, Warner Bros Discovery up 5.3%, and Netflix down about 4%.
Regulatory and contractual complications remain. If Warner Bros accepts Paramount’s offer, it would owe Netflix a $2.8 billion breakup fee; Netflix would face a $5.8 billion payment if its deal collapses. Both potential deals are expected to draw intense antitrust scrutiny from regulators and scrutiny from bipartisan lawmakers and Hollywood unions concerned about jobs and consumer prices.
Observers say the contest is likely to be prolonged as Paramount courts shareholders, regulators and politicians to challenge Netflix’s bid. “The Warner Bros Discovery acquisition is far from over,” said eMarketer senior analyst Ross Benes, noting Paramount will appeal to multiple stakeholders to try to stymie Netflix.
