On December 5, the entertainment world was rocked when Netflix and Warner Bros. announced a massive deal setting Netflix up to purchase the legendary Hollywood studio, creating one of the largest media entities of all time. Today, Paramount Skydance—which has been vying for Warner Bros. for months—appears to be saying, “Not so fast.”
Paramount Skydance, the David Ellison-led company fresh off of its own merger earlier this year, has been circling around a potential buy-out of Warner Bros. Discovery (Warner Bros.’ parent company) since at least September. Last week, it appeared that Netflix was swooping in to snatch a large part of the deal. And now, Paramount Skydance has countered with a hostile takeover bid to secure Warner Bros. Discovery once and for all. Here’s everything you need to know about the saga and what’s at stake:
What’s the backstory?
Back in early September, initial reports emerged that Paramount Skydance was preparing a bid to buy Warner Bros. Discovery, one of its rivals. The following month, Warner Bros. Discovery confirmed that it was open to a potential sale in a press release, sharing that it had received “unsolicited interest from multiple parties for the entire company.” Paramount Skydance and Netflix were two of the top contenders identified for the deal.
In late October, Reuters reported that Ellison’s initial $60 billion approach offer was rejected by Warner Bros. Discovery, though analysts still pegged Paramount Skydance as the most likely victor in the bidding wars.
Then, on December 5, Netflix and Warner Bros. came forward to announce a deal in which Netflix would purchase the legendary Hollywood studio, along with its HBO Max and HBO divisions, for a total enterprise value of approximately $82.7 billion (which Netflix says has an equity value of $72.0 billion).
The agreement came after Warner Bros. Discovery announced this summer that it would split the current company into two, with the newly created companies owning its Streaming & Studios assets and Global Networks divisions, respectively. Through the proposed acquisition, Netflix would be buying the “Streaming & Studios” company that will spin off from Warner Bros. Discovery next year. Paramount Skydance, on the other hand, had expressed interest in buying all of Warner Bros. Discovery’s assets.
How did people react to the Netflix deal?
Experts say that the colossal Netflix-slash-Warner Bros. deal would give the world’s largest streaming service access to a giant library of valuable IP, including the Harry Potter film franchise, the DC Universe, Barbie, and more.
The proposed deal sparked immediate concerns that Netflix might gain too much of a monopoly within the entertainment industry, potentially allowing the company to bump up its subscription prices. Democratic senator Elizabeth Warren called the deal an “anti-monopoly nightmare” in a statement. “It would create one massive media giant with control of nearly half of the streaming market—giving Americans fewer choices over what and how they watch, and putting American workers at risk,” she wrote on X.
Another notable commentator was President Trump, who said on December 7 that the deal “could be a problem” because of the size of the combined market share.
What’s happening now?
Now, it seems that the Netflix deal could be on shaky ground.
On December 8, Paramount Skydance announced that it would go straight to Warner Bros. Discovery shareholders with an all-cash, $30 per share offer that equates to an enterprise value of about $108.4 billion. Warner Bros. Discovery reportedly rejected the deal last week, but now, its investors will get a chance to weigh in. This tactic is called a “hostile takeover bid,” and it’s intended to put pressure on a target company by recruiting its shareholders on the side of the deal.
“We’re really here to finish what we started,” Ellison told CNBC this morning. He added, “We’re sitting on Wall Street, where cash is still king. We are offering shareholders $17.6 billion more cash than the deal they currently have signed up with Netflix, and we believe when they see what it is currently in our offer that that’s what they’ll vote for.”
At this point, the deal is in limbo as shareholders react to Ellison’s new offer. And, no matter which company comes out victorious, the acquisition is likely to face regulatory fights to determine whether the megamerger truly represents a media monopoly.
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