Warner Bros opens door to Paramount as bidding war continues to heat up

Editor-in-chiefFebruary 25, 20263 Mins read9

Warner Bros Opens Door to Paramount as Bidding War Continues to Heat Up

Introduction

The entertainment industry is witnessing a seismic shift as Warner Bros Discovery reconsiders its merger plans with Netflix in light of a revised and sweetened acquisition proposal from Paramount Skydance. This development marks a pivotal moment in Hollywood’s ongoing consolidation, with billions of dollars and the future of major media brands hanging in the balance.

Key Points

Warner Bros Discovery received a revised $31 per share cash offer from Paramount Skydance
The new bid is approximately $108 billion, up from the previous $108 billion offer
Paramount has offered to cover the $2.8 billion termination fee Warner Bros would owe Netflix
A $7 billion reverse termination fee has been pledged if regulatory hurdles prevent closure
President Donald Trump has indicated he will be "involved" in the merger decision
The Netflix deal remains active but is now under serious challenge

Background

The current bidding war represents the latest chapter in Hollywood’s ongoing consolidation trend, where major studios and streaming platforms are seeking scale to compete in an increasingly crowded digital entertainment landscape. Warner Bros Discovery, formed from the merger of WarnerMedia and Discovery in 2022, has been exploring strategic options to strengthen its position against streaming giants like Netflix, Disney+, and Amazon Prime Video.

Netflix entered the fray earlier with an $83 billion offer that would see Warner Bros’ entertainment assets combined with the streaming leader, while leaving Warner Bros television properties such as CNN and Discovery to be spun off into a separate publicly traded company. This structure was designed to address regulatory concerns while giving Netflix the content library it needs to fuel its global growth strategy.

Analysis

The revised Paramount Skydance offer represents a significant escalation in what has become one of the most closely watched media mergers in recent history. By increasing the per-share price by $1 and adding substantial termination fee protections, Paramount has effectively raised the stakes and forced Warner Bros Discovery’s board to seriously consider whether this new proposal represents a superior alternative to the Netflix deal.

The involvement of the Ellison family adds another layer of complexity to the negotiations. David Ellison, who runs Paramount, and his father Larry Ellison, the Oracle founder and billionaire Trump ally, have positioned themselves strategically in this high-stakes game. The financing structure, largely backed by Larry Ellison’s resources, demonstrates the family’s commitment to expanding their media empire.

President Trump’s public statements about being “involved” in the merger decision have raised eyebrows in both political and business circles. While presidential involvement in private business transactions is unusual, Trump’s history of using his influence to shape corporate outcomes suggests this could become a significant factor in the final decision.

The potential transfer of CNN to Ellison family control has become a particular point of contention, given the network’s often adversarial relationship with Trump and conservative critics. This political dimension could influence regulatory reviews and public perception of the deal’s merits.

Practical Advice

For investors and industry observers, this situation highlights several key considerations:

1. **Monitor regulatory developments** – The Department of Justice’s review of the Netflix deal and potential European regulatory responses will be crucial factors in determining which merger ultimately succeeds.

2. **Watch for counteroffers** – Given the four-business-day window Netflix has to respond if Warner Bros determines Paramount’s offer is superior, expect rapid developments in the coming days.

3. **Consider political implications** – The involvement of the Ellison family and Trump’s stated interest could influence the timeline and structure of any eventual deal.

4. **Evaluate long-term strategic fit** – Beyond the headline numbers, consider which merger better positions the combined entity for success in the evolving streaming landscape.

FAQ

**Q: What is the current status of the Warner Bros Discovery merger negotiations?**
A: Warner Bros Discovery’s board has acknowledged Paramount’s revised offer as potentially superior to the Netflix deal, but has not yet made a final determination. The Netflix deal remains in effect while the review continues.

**Q: How much is Paramount offering for Warner Bros Discovery?**
A: Paramount Skydance’s revised offer is valued at approximately $108 billion, or $31 per share in cash, up from their previous $108 billion proposal.

**Q: Why is President Trump involved in this merger discussion?**
A: Trump has stated he will be “involved” in the merger decision, though the specific nature of his involvement remains unclear. His comments have added a political dimension to what is primarily a business transaction.

**Q: What happens to CNN if the Paramount deal goes through?**
A: If Paramount acquires Warner Bros Discovery, CNN would transfer to Ellison family control, as Paramount would acquire all of Warner Bros’ assets including its news properties.

**Q: How does this affect Netflix’s position?**
A: Netflix’s $83 billion offer is now under serious threat, though the company is expected to potentially raise its bid to compete with Paramount’s revised proposal.

Conclusion

The Warner Bros Discovery bidding war represents a fascinating intersection of business strategy, regulatory oversight, and political influence. As Paramount’s sweetened offer forces a reconsideration of the Netflix deal, the entertainment industry watches closely to see which merger will ultimately reshape Hollywood’s landscape. The involvement of high-profile figures like the Ellisons and President Trump adds layers of complexity that extend beyond traditional business considerations.

The coming days will be critical as Warner Bros Discovery’s board completes its review and Netflix decides whether to counter Paramount’s bid. Regardless of the outcome, this bidding war signals the continuing consolidation trend in media and entertainment, as companies seek the scale and resources necessary to compete in an increasingly digital and global marketplace.