Who will ultimately acquire Warner Bros. Discovery's (WBD.US) assets? As the owner of one of Hollywood's largest and oldest film studios, any merger or acquisition involving the company could reshape the entertainment industry for decades. On December 5, Warner Bros. Discovery announced that Netflix (NFLX.US), the global leader in streaming, had agreed to acquire its streaming and studio assets for $82.7 billion, including debt. Three days later, Paramount Global (PSKY.US) launched a hostile takeover bid valuing Warner Bros. Discovery at $108.4 billion. Regardless of the outcome, regulatory approval will be required.
Why is Warner Bros. Discovery up for sale? The rise of streaming has disrupted traditional media by eroding cable subscriptions, advertising revenue, and box office earnings. Under CEO David Zaslav, Warner Bros. Discovery struggled to build its own digital content platform, ultimately merging with Discovery in 2022—a company known for lower-cost unscripted and lifestyle programming. However, its stock has since declined.
In June, Warner Bros. Discovery announced plans to split into two units: one focused on cable networks and the other on streaming and film studios. Insiders suggest Zaslav believes spinning off the streaming and studio businesses from debt-laden cable assets could unlock significant value. Later in the fall, Paramount made three unsolicited bids for the entire company. A successful acquisition would give Paramount control of two major studios (Paramount and Warner Bros. Discovery) and two streaming services (Paramount+ and HBO Max).
**Key Differences Between Netflix and Paramount’s Offers** Netflix’s deal targets only Warner Bros. Discovery’s Hollywood studio and streaming operations, excluding cable networks like CNN, TNT, and Discovery, which would be spun off pre-merger. The offer stands at $27.75 per share in cash and stock. Paramount’s all-share bid values Warner Bros. Discovery at $30 per share. However, if Warner Bros. accepts a rival offer, it must pay Netflix a $2.8 billion breakup fee—an added cost for Paramount.
**Regulatory Hurdles** Any sale will face prolonged scrutiny from U.S. and EU regulators. Netflix’s proposed merger has drawn bipartisan criticism over concerns it would create a streaming giant with excessive market control. Former President Donald Trump, who has ties to Oracle co-founder Larry Ellison (father of Paramount CEO David Ellison), vowed to personally review the deal. Paramount argues its smaller streaming footprint improves approval odds, but antitrust concerns persist. If blocked, Netflix would owe Warner Bros. Discovery a $5.8 billion termination fee.
**Industry Backlash** Cinema operators and fans fear Netflix’s acquisition could marginalize theatrical releases. While Netflix has pledged to maintain Warner Bros.’ current theatrical model, it plans to release about 30 films in theaters this year—a shift from its home-viewing focus. Netflix co-CEO Ted Sarandos emphasized faster consumer access but denied altering release strategies.
**HBO Max’s Future** Netflix hinted at operating HBO Max as a standalone service, akin to Disney’s dual offerings of Disney+ and Hulu. Co-CEO Greg Peters noted overlapping subscriber bases and potential for bundled pricing and global content distribution.
**Leadership and Cable Spin-Off** Zaslav’s role post-merger remains unclear. Meanwhile, Warner Bros. Discovery plans to spin off cable networks (CNN, TNT, HGTV) into a new entity, Discovery Global, led by CFO Gunnar Wiedenfels, by Q3 2026.
**Market Impact** Netflix aims for $2–3 billion in cost synergies, largely from streamlining overlapping operations. The merger would combine Warner Bros.’ iconic franchises—from *Harry Potter* and *Game of Thrones* to DC Comics—with Netflix’s global reach, creating a "streaming titan," as William Blair analysts noted. Needham’s Laura Martin highlighted the deal’s defensive edge: "There’s only one Warner Bros., and this prevents rivals from scaling up."
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