Bidding War Intensifies for Warner Bros. Discovery

Warner Bros. Discovery (A) US9344231041

The contest for control of media conglomerate Warner Bros. Discovery (WBD) has entered a critical new phase. With a rival consortium pushing a hostile bid and Netflix reportedly considering a major revision to its own merger terms, shareholders face a pivotal moment. The central question is whether competitive pressure will force the streaming giant to switch to an all-cash proposal.

The catalyst for the current escalation is an aggressive play by Paramount Skydance. Since December 8, the consortium has been offering $30 per share in cash for the entire company. This bid implies an enterprise valuation of approximately $108.4 billion, including debt.

After WBD's board formally rejected this offer on January 7, Paramount pursued legal action. A lawsuit was filed in Delaware on January 12, seeking to compel the disclosure of the valuation metrics that led the board to favor the lower-valued Netflix deal. To address any financing concerns, Oracle co-founder Larry Ellison is backing the offer with a personal guarantee of $40.4 billion.

Netflix Considers Pivoting to an All-Cash Deal

In response, Netflix is reportedly weighing a significant change to its original merger agreement, announced on December 5, 2025. The initial deal valued Warner Bros. Discovery's studio and streaming assets at roughly $27.75 per share, using a mix of cash and Netflix stock.

Market volatility in Netflix's share price has threatened the calculated value of this stock-and-cash offer. According to weekend reports, the company is now contemplating a shift to a full cash payment. This strategic pivot is seen as a move to provide investors with the same certainty as the competing bid and to potentially accelerate regulatory approval.

Market Prices in Improved Terms

Trading activity suggests the market is already anticipating sweeter terms. WBD shares closed at $28.58 on Friday, trading notably above the implied value of the original Netflix offer but still below Paramount's $30-per-share bid. This pricing dynamic indicates that arbitrage traders are betting the board cannot maintain its stance indefinitely without a financial improvement from Netflix.

The coming week is expected to bring heightened volatility as U.S. markets reopen. All eyes will be on Netflix's upcoming quarterly earnings, which market participants hope will yield concrete clues about the new deal structure. Concurrently, the deadline for nominating board directors for the 2026 annual meeting is approaching—a leverage point Paramount is likely to use to present its offer directly to shareholders for a vote.