The Battle for Warner Bros. Discovery: A High-Stakes Takeover Saga

Warner Bros. Discovery (A) US9344231041

Warner Bros. Discovery finds itself at the heart of a complex acquisition drama, a situation shaped by looming deadlines, legal maneuvers, and significant political scrutiny. Two distinct parties are now vying for control, each attempting to position its proposal as the more secure and viable path forward. This raises a critical question: how substantial are the claimed regulatory advancements in this fiercely contested process?

Netflix has moved to solidify its position, emphasizing the concrete facts it believes commit the Warner Bros. Discovery board. In a Bloomberg TV interview on February 20, Co-CEO Ted Sarandos defended the binding merger agreement already signed by the companies. Valued at $83 billion, the all-cash offer proposes $27.75 per share plus a contingent value right (a "stub" share) in Discovery Global. Sarandos also committed to maintaining a 45-day theatrical window for major film releases.

A crucial element strengthening Netflix's hand is the board's unanimous recommendation for this merger. Furthermore, should the board reverse its decision, a termination fee of $2.8 billion would be payable immediately to Netflix.

Paramount's Counterplay and Mounting External Pressure

On the opposing side, Paramount Skydance announced on February 19 that the Hart-Scott-Rodino waiting period with the U.S. Department of Justice had expired. From Paramount's perspective, this removes a major domestic regulatory obstacle for its competing bid.

However, Paramount faces a tight deadline. It has a seven-day window to submit a "best and final" counteroffer, which concludes on February 23. Reports suggest Paramount has indicated a willingness to offer up to $31 per share, though this remains a verbal assertion at present. Converting this into a formal, binding proposal before the deadline is seen as pivotal.

Simultaneously, external pressures are intensifying. California Attorney General Rob Bonta has called for a comprehensive antitrust review of the proposed Netflix deal. Significant resistance is also emerging from within the film industry. Director James Cameron, in a letter to Senator Mike Lee dated February 19, criticized the potential merger, warning of substantial negative consequences for the theatrical business. In a separate development, eight U.S. senators have requested that Warner Bros. Discovery preserve documents related to any contacts with the former Trump administration concerning the takeover attempt.

Financial Context and the Upcoming Earnings Catalyst

Following a strong rally in recent months, Warner Bros. Discovery shares are trading at elevated levels. Current price data shows the stock at ?24.41, placing it just 4.4% below its 52-week high.

The next major event for the company is imminent. On February 26, prior to the U.S. market open, management will release fourth-quarter and full-year 2025 financial results. An earnings conference call is scheduled to follow at 8:00 a.m. ET. This report will be closely watched, as the company's previous quarterly update for Q3 showed revenue of $9.05 billion?a 6% year-over-year decline?and a normalized loss per share of $0.06.