MW How Paramount beats Netflix, wins Warner Bros. and saves Hollywood from Big Tech
By Kenneth Rapoza
This fight is about much more than money
Choose Paramount over Netflix and both politicians and regulators get their Hollywood ending.
If Netflix $(NFLX)$ wants Warner Bros. Discovery $(WBD)$ so badly, and if the Warner Bros. board prefers selling to them, then Netflix will have to raise its bid to match Paramount Skydance's $(PSKY)$ bid of $30 a share. But even that may not be enough.
Yes, Paramount's bidding group is shrinking, but that doesn't put Netflix in the pole position. The Netflix bid will likely face higher regulatory hurdles and delays than Paramount's. In a hostile takeover, shareholders want their money faster. They, not the board, determine the outcome, even if the board recommends a different course.
Even Jared Kushner's private-equity firm, Affinity Partners, dropping out of the Paramount bidding group has not derailed the bid. The exit of China's Tencent and Affinity makes Paramount more dependent on international partners who are likely to pass muster with the Committee on Foreign Investment in the United States, possibly adding more Middle East names to the team. Affinity Partners has close ties with the other Paramount partners, namely the Qatar Investment Authority. Abu Dhabi-based asset manager Lunate is also an Affinity Partners investor, so perhaps Lunate can pick up where Affinity left off.
President Donald Trump, for his part, says he has no friends in the executive suites of either bidder. However, he also said that a Netflix deal "could be" a problem, and that the Trump administration will be playing an active role in any deal for WBD. Trump also says it's "imperative" that Warner's new owner also take over CNN. So Paramount's offer, which would include CNN, may present fewer antitrust and regulatory hurdles.
The Warner Bros. board argues that both suitors face equal antitrust hurdles. They may be off base, as even anti-Trump voices such as Sen. Elizabeth Warren, a Democrat from Massachusetts, recognize the problems with the Netflix bid.
Paramount holds a few aces
Paramount is sticking with its bid, even as Warner's board said the offer undervalues the company. Here is how the deal sours for Netflix and sweetens for Paramount.First, if antitrust regulators demand that Netflix sell HBO and Warner Bros. Pictures, Netflix would bail out. Demanding that Netflix sign off on the long-term licensing of Warner content to other broadcasters would also likely scuttle its bid.
For the institutional shareholders of Warner Bros. Discovery, this would be a decisive moment. If the Paramount bid pays them more and they believe it is sufficient to close, the Warner board's preference becomes moot. Shareholders typically accept the higher bid, no matter what the board recommends.
Perhaps Kushner stepped away because he does not want any noise from the press saying Paramount's offer goes through because he is Trump's son-in-law. I suspect he will quietly help Paramount find new partners or expand the positions of existing ones.
New financial muscle and new terms will provide Warner Bros. with a legally bound, unconditional and unavoidable cash offering from Paramount. This would neutralize the board's argument about Paramount's "illusory" financing.
Once Paramount achieves this credibility, institutional investors will begin publicly backing Paramount, and Netflix will lose its "certainty premium" in the market. Moreover, Netflix will struggle to avoid being seen as a political lightning rod, disliked by studios and Hollywood elites alike.
Paramount's case to shareholders is straightforward: earn more money now with potentially less antitrust risk.
Paramount's case to shareholders is straightforward: earn more money now with potentially less antitrust risk. Netflix plus Warner Bros. could create an entertainment platform monopoly. Paramount acquiring Warner Bros. is more like a Hollywood studio merger than a Big Tech incursion. Choosing Paramount over Netflix means politicians can claim, "We blocked Big Tech from monopolizing sports and entertainment media and preserved studio competition." For that reason, regulators might also see Paramount as the easier case to approve.
Kenneth Rapoza is an analyst for the Coalition for a Prosperous America, which represents U.S. producers and workers. Rapoza has no positions in any of the stocks mentioned.
More: Block the Warner Bros. sale, break up 'Big Streaming' - and give us lower prices
Plus: Warner Bros. Discover's shareholders don't need top dollar. Paramount can offer something Netflix can't.
-Kenneth Rapoza
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December 22, 2025 07:34 ET (12:34 GMT)
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