The Battle for Warner Bros. Intensifies as Paramount Challenges Netflix

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A major corporate acquisition in the entertainment sector has escalated into a full-scale bidding war. The initial agreement, announced on December 5, 2025, saw streaming leader Netflix propose an $82.7 billion takeover of Warner Bros. Discovery. This move has now been countered by a rival, unsolicited bid from Paramount Skydance, sending shockwaves through the market and causing Netflix shares to decline approximately 6% since the deal's announcement, closing Friday at $100.24.

Paramount Skydance entered the fray with a substantially higher all-cash offer of $30 per share, valuing Warner Bros. Discovery at $108.4 billion—a $17.6 billion premium over the Netflix proposal. Paramount CEO David Ellison stated to CNBC that the intent is to "finish what we started," with plans to acquire the entire company, including its cable assets. The company also contends its offer would face a quicker antitrust review process.

Netflix's co-CEO, Ted Sarandos, expressed confidence in his company's original agreement during a UBS conference. He dismissed the competing bid, stating, "We have a signed deal and are extremely satisfied with it." Netflix has criticized Paramount's approach, suggesting its projected $6 billion in synergies would rely heavily on job cuts, whereas Netflix claims its plan would preserve and create employment.

The Structure of Netflix's Original Bid

Netflix's $82.7 billion proposal aims to acquire Warner Bros.'s legendary film and TV studios, along with the HBO Max and HBO platforms. The offer of $27.75 per share consists of $23.25 in cash and $4.50 in Netflix stock. A key condition is the spin-off of WBD's cable business—which includes CNN, TNT, and Discovery channels—into a separate, standalone entity to be named "Discovery Global."

The strategic value for Netflix lies in access to iconic intellectual property, including franchises such as Game of Thrones (and its prequel House of the Dragon), the DC Universe (featuring Batman, Superman, and Wonder Woman), Harry Potter, The Big Bang Theory, and The Sopranos.

At the UBS conference, Sarandos outlined a three-phase value creation plan. This involves aggressively licensing the Warner content library, expanding the HBO brand as a premium destination, and developing new revenue streams through gaming, merchandise, and theme parks. The company anticipates annual cost savings of $2 to $3 billion beginning in the third year post-closing.

Regulatory and Political Hurdles Emerge

The proposed consolidation has attracted significant political attention. Former President Donald Trump voiced concerns on Sunday, noting the deal would substantially increase Netflix's market share and stating, "That could be a problem." He confirmed an unusual intention to be "involved" in the antitrust authorities' decision-making process. Reports from CNBC indicate the Trump administration views the potential merger with "considerable skepticism."

Sarandos had previously met with Trump at the White House in mid-November to discuss the planned acquisition. Market analysts are growing wary; Morningstar analyst Matthew Dolgin has labeled the price "exorbitantly high" and now estimates the probability of the deal closing at below 50%. Netflix is on the hook for a $5.8 billion breakup fee should the transaction fail.

Industry Backlash and Strategic Reassurance

The announcement has alarmed cinema operators, with a major industry association calling the takeover an "unprecedented threat." In a notable shift, Sarandos, who had previously dismissed theatrical releases as an "outdated concept," sought to reassure stakeholders. "We did not buy this company to destroy that value," he said. "If the deal goes through, we are in that business—and we will do it right."

The combined scale of the entities would be formidable. Netflix boasts over 300 million subscribers, and HBO Max has an additional 128 million. According to data from Sensor Tower, a merged entity would control approximately 56% of monthly active users in the global streaming market.

The Path Forward

The spin-off of Discovery Global is targeted for completion in the third quarter of 2026. Netflix anticipates a closing window of 12 to 18 months after the signing of a definitive agreement, contingent on regulatory approval. Shareholders of Warner Bros. Discovery must still vote to approve any deal. As the bidding contest continues, the market awaits Netflix's next quarterly earnings report, scheduled for January 20, 2026.