In a decisive move that intensifies one of Hollywood's fiercest corporate battles, Warner Bros Discovery has for a second time rebuffed a colossal takeover proposal from rival Paramount Global. The board has instead thrown its weight behind a competing offer from streaming titan Netflix, setting the stage for a dramatic reshaping of the US media landscape.
The Debt-Fuelled Gamble: Why Paramount's Bid Was Rejected
Warner Bros' board delivered a blunt assessment to its shareholders, labelling Paramount's revised $108.4 billion bid as the "biggest leveraged buyout in history." The central concern is the staggering debt load the merger would create. The board warned the deal would saddle the combined entity with approximately $87 billion in debt, jeopardising its credit rating and placing severe strain on cash flow.
Even a personal $40 billion equity guarantee from Oracle co-founder Larry Ellison, which Paramount used to sweeten its offer, failed to alleviate the board's fears. They concluded the proposal was riddled with execution risk and failed to adequately cover the real costs involved. In stark terms, Warner Bros stated shareholders were being asked to "take on huge downside risk for too little upside."
The board also raised specific operational concerns, noting Paramount's terms would restrict Warner Bros' strategic freedom, including plans to spin off its cable TV networks into a separate public company named Discovery Global.
The Safer Bet: Warner Bros Embraces Netflix's Offer
In contrast to the risky Paramount proposition, Warner Bros is advocating for shareholders to accept a $82.7 billion cash-and-stock offer from Netflix. While lower in headline value, the board presented this as a cleaner and far more secure transaction with a higher likelihood of completion.
Warner Bros pointed to Netflix's formidable advantages: investment-grade credit, a globally proven streaming platform, and significantly fewer financing hurdles. The market valuation gap between the two suitors is vast, with Paramount valued around $14 billion and Netflix commanding a market capitalisation close to $400 billion.
This potential deal could see iconic Warner Bros franchises, including Superman, Harry Potter, and Batman, move under the Netflix umbrella by the end of 2026.
Reshaping Hollywood: The Stakes of the Streaming Wars
The outcome of this takeover tussle will fundamentally alter the balance of power in American media. A merger between Paramount and Warner Bros would have created a formidable competitor to Disney, uniting two major film studios, broadcast networks, and streaming services.
The fierce battle underscores the desperate scramble among legacy studios to consolidate scale and content libraries as traditional television revenues decline and the streaming wars demand massive investment. However, the path to any deal is not clear. Regulators and lawmakers from both US political parties have already voiced concerns about further media consolidation, with former President Donald Trump stating he plans to weigh in on the matter.
How America's Media Giants Compare:
- Warner Bros Discovery: Owns HBO Max, CNN, and DC Studios. Revenue slipped 5% to $39.3bn in 2024. Has 128 million global streaming subscribers.
- Netflix: The dominant streamer with 301.6 million subscribers. Revenue jumped 16% to ~$39bn last year.
- Paramount Global: Owner of CBS and Paramount+. Revenue fell 1% to $29.2bn, burdened by debt and linear TV ad declines.
- Disney: Revenue rose 3% to $91.4bn. Disney+ and Hulu have 196 million subscriptions combined.
