Regulatory Scrutiny Intensifies in Battle for Warner Bros. Discovery

Warner Bros. Discovery (A) US9344231041

The contest to acquire media conglomerate Warner Bros. Discovery has entered a new phase of complexity, with British political figures now calling for regulatory intervention. This development introduces a significant potential obstacle for the proposed $83 billion offer from Netflix, even as a competing bid from Paramount Skydance approaches a key deadline on February 20.

A coalition of more than a dozen influential UK politicians, including former culture secretaries Chris Smith, Oliver Dowden, and Karen Bradley, alongside former BBC Director-General Tony Hall, has formally contacted the Competition and Markets Authority (CMA). In a letter sent on Tuesday, the group urged the watchdog to launch a probe into Netflix's acquisition plan.

Their central concern is that absorbing Warner's studios, HBO, and DC Comics would cement Netflix's position as a "dominant force" in the global streaming sector. They argue this consolidation would result in a "substantial loss of competition," ultimately harming consumer choice. The CMA has not yet issued a public statement regarding the case.

A Tale of Two Offers

Amidst this political maneuvering, two distinct acquisition proposals are on the table for Warner Bros. Discovery shareholders:

• The Netflix Proposal: Valued at $83 billion, or $27.75 per share, this bid targets only the studio and streaming assets. It was accepted by the Warner Bros. Discovery board in December.
• The Paramount Skydance Proposal: A higher, hostile all-company offer worth $108.4 billion, or $30.00 per share.

Paramount Skydance is pursuing an aggressive strategy to advance its bid. On January 12, the company filed a lawsuit against Warner Bros. Discovery, seeking to compel the disclosure of detailed financial data related to the Netflix agreement. Concurrently, it is waging a proxy battle to install its own nominees on the target company's board.

Upcoming U.S. Senate Hearing Adds Another Layer

The regulatory landscape is set to become more challenging on February 3. On that date, Netflix Co-CEO Ted Sarandos and Warner Bros. Discovery executive Bruce Campbell are scheduled to testify before the U.S. Senate. The combination of a potential British competition review and an American Senate hearing is expected to substantially prolong the regulatory timeline for any deal, regardless of which suitor ultimately prevails.

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