The board of Warner Bros Discovery (WBD) is reportedly on the verge of advising its shareholders to reject a colossal $108bn (£81bn) hostile takeover bid from Paramount Skydance. This pivotal decision, which could be announced as early as Wednesday, effectively clears the runway for streaming giant Netflix to proceed with its own $82.7bn buyout of the Hollywood studio's prized entertainment assets.
The Battle for Hollywood's Crown Jewels
This high-stakes corporate drama unfolded rapidly over the past fortnight. Netflix initially won an auction for WBD's studio and streaming operations with an $82.7bn offer. That deal would grant Netflix control of iconic franchises including Harry Potter and the DC Comics superhero universe, as well as the premium cable network HBO, home to global hits like Game of Thrones, The White Lotus, and Succession. Notably, Netflix's agreement does not include WBD's cable channels such as CNN, TBS, and TNT, which are slated to be spun off into a separate company next year.
Almost immediately after Netflix's victory, a rival bid emerged. Paramount Skydance, led by David Ellison and backed by the vast wealth of his father, Oracle founder Larry Ellison, went directly to WBD shareholders with a higher, all-cash offer of $108bn for the entire company. Despite the larger headline figure, the Financial Times reports that WBD's board has less confidence in this proposal. Their scepticism stems from the financing structure, which is backed by the Ellison family trust—valued at nearly $250bn in Oracle stock—rather than by Larry Ellison personally.
Key Criticisms and a Surprise Withdrawal
Reports indicate that WBD is preparing to outline four central criticisms of Paramount's approach, arguing its value, financing, and terms are inferior to the Netflix package of cash and shares. In a significant blow to the Paramount bid, Affinity Partners, the investment firm run by Jared Kushner—son-in-law and former adviser to Donald Trump—withdrew its backing on Tuesday.
Paramount has accused the WBD board of failing to engage properly with its offer, which prompted the hostile move directly to shareholders. The company has also stated this is not its "best and final" deal. A major point of contention between the two competing proposals is the regulatory landscape.
The Regulatory Hurdles Ahead
Paramount argues that Netflix's acquisition of HBO Max would create a dominant force in the North American streaming market, inviting intense regulatory scrutiny. Netflix counters that if major platforms like YouTube are considered, such dominance is not evident. To demonstrate its confidence, Netflix has attached a substantial $5.8bn termination fee to its deal, a notably high sum that signals belief in regulatory approval.
However, Paramount's own bid faces questions over its funding sources. Filings reveal that sovereign wealth funds from Qatar, Saudi Arabia, and Abu Dhabi are set to contribute $24bn, accounting for almost 60% of the $40.7bn equity portion—double the contribution from the Ellisons. US Federal Communications Commission rules typically block foreign investors from owning more than 20% of broadcast licensees like CBS and CNN. Paramount contends these rules do not apply, as the wealth funds have agreed to forgo governance rights and board seats.
Both Warner Bros Discovery and Paramount declined to comment on the ongoing situation. The board's impending rejection sets the stage for a seismic shift in the media landscape, with Netflix positioned to become an even more formidable powerhouse in global entertainment.
