Paramount Refuses to Take ‘No’ for an Answer on Warner Bros. Takeover Bid

Just when Warner Bros. Discovery and Netflix were picking out china patterns for their $82.7 billion elopement, spurned suitor David Ellison kicked down the church doors shouting, “I object!”

On Monday, Ellison’s Paramount SkyDance made a hostile takeover bid for WBD, claiming its all-cash offer “provides shareholders $18 billion more in cash than the Netflix consideration.” And crucially, Ellison’s new entertainment company said its deal would face significantly less antitrust scrutiny.

The Big Picture

As Hollywood itself has warned us in countless plotlines: Be careful what you wish for. To coerce WBD into a sale, Paramount submitted an initial, unsolicited bid in October valued at around $20 per share, according to Reuters sources. Instead, the aggressive move kicked off a bidding war, and now Paramount is throwing a Hail Mary at $30 per share.

The straight-to-shareholders pitch rests in part on the argument that a Paramount takeover is more appealing to an audience in Washington, DC. Netflix leads the subscription streaming market with more than 300 million subscribers, while WBD’s HBO Max sits behind Amazon and Disney’s offerings with around 130 million subscribers, and Paramount+ has around 79 million subscribers. Paramount is arguing that Netflix would unfairly control the streaming market with WBD in tow, a sentiment seemingly shared by President Trump.

For now, WBD and Netflix are expected to say their deal should pass antitrust muster, if only everyone looks at the bigger picture:

• Netflix is expected to argue that the market-share point is overstated, given that 75% of HBO Max’s 130 million subscribers already subscribe to Netflix, according to reporting from Bloomberg. Co-CEO Ted Sarandos on Monday also promised that Warner Bros. TV will continue to produce and sell shows to rival distributors, something Netflix has never done.
• The company may also argue that its WBD acquisition wouldn’t make it the dominant player in the streaming market but rather a better competitor in a much larger market currently led by YouTube. Per Nielsen, YouTube accounted for nearly 13% of all streaming engagement in October, compared with 8% for Netflix, 2.1% for Paramount and 1.3% for WBD.

History Lesson: For longtime Warner Bros veterans, the saga must feel as familiar as the story beats in the umpteenth Batman reboot. Way back in 2000, the company known as Time Warner sold itself to AOL for $180 billion — a deal that started with the threat of a hostile takeover by AOL. Even the presidential concerns are familiar. In 2019, during Trump 1.0, POTUS ordered his Department of Justice to oppose AT&T’s acquisition of the company then known as Time Warner … only for the DOJ to lose its case in federal court. The lesson here? Should Ellison fail today, just wait. Another shot will come.