The board of Warner Bros Discovery (WBD) is reportedly preparing to formally advise its shareholders to reject a massive $108 billion (£81 billion) hostile takeover bid from Paramount Skydance. This pivotal decision is expected to be announced as early as Wednesday, effectively clearing the runway for streaming giant Netflix to proceed with its own planned acquisition of the storied film and television group.
The Battle for Hollywood's Crown Jewels
The corporate drama escalated almost two weeks ago when Paramount Skydance—led by David Ellison and financially backed by his billionaire father, Oracle founder Larry Ellison—bypassed WBD's board and took its rival offer directly to shareholders. This move came just days after Netflix had won an auction for the studio with a successful bid of $82.7 billion.
Netflix's deal, should it proceed, would grant it control of some of entertainment's most valuable assets. These include the lucrative Harry Potter and DC Comics superhero film franchises, as well as the premium cable network HBO, home to global hits like Game of Thrones, The White Lotus, and Succession. Notably, the agreement does not encompass WBD's cable channels, such as CNN, TBS, and TNT, which are scheduled to be spun off into a separate company next year.
Why Warner Bros Favours Netflix Over Paramount
Despite Paramount's higher, all-cash offer for the entirety of WBD, the board is said to have greater confidence in the Netflix proposal. A key point of contention is the financing behind Paramount's bid. Reports indicate the board is wary because the offer is backed by the Ellison family trust, valued at nearly $250 billion in Oracle stock, rather than by Larry Ellison personally.
WBD is expected to outline four central criticisms of Paramount's offer, arguing its value, financing, and terms are inferior to Netflix's cash-and-shares package. In a significant blow to Paramount's efforts, Affinity Partners—the investment firm run by Jared Kushner, former adviser and son-in-law to Donald Trump—withdrew its support for the bid on Tuesday.
Regulatory Hurdles and Sovereign Wealth Concerns
The takeover tussle also hinges on potential regulatory scrutiny. Paramount has argued that Netflix's purchase of HBO Max would create a dominant force in the North American streaming market, inviting closer antitrust examination. Netflix counters that when major platforms like YouTube are considered, such dominance is not evident. To underscore its confidence, Netflix has attached a substantial $5.8 billion termination fee to its deal.
Meanwhile, questions have been raised about the source of Paramount's funding. Filings reveal that sovereign wealth funds from Qatar, Saudi Arabia, and Abu Dhabi are poised to contribute $24 billion, accounting for almost 60% of the required equity—double the Ellison family's commitment. While US ownership rules restrict foreign control of broadcast licences, Paramount asserts these rules don't apply as the funds have agreed to forgo governance rights.
With the board's rejection imminent, the path is set for a dramatic consolidation in the media landscape, potentially making Netflix the owner of some of Hollywood's most iconic brands. Both WBD and Paramount have declined to comment on the ongoing situation.
