In December, Netflix announced that it would take over Warner Bros for $83 billion – or more precisely, that it would make an offer of that amount, which it was considered impossible to refuse. A global streaming giant wanted to merge with one of the largest Hollywood studios: Harry Potter, DC (Batman, Justice League, etc.), Lord of the Rings or Game of Thrones are just a few examples that would have gone to Netflix from now on. Although the boards of both companies unanimously voted in favor of the deal, concerns quickly emerged from various quarters. Competition watchdogs around the world immediately expressed concerns because the largest series archive in the world (HBO), the largest film franchises and the most market power in streaming would then be in one hand. Paramount countered with an offer
Paramount Skydance, which incidentally had significant financial support from Larry Ellison (Oracle), presented a better offer shortly afterwards. At around $90 billion, this exceeded Netflix’s offer and was classified as a “superior proposal” by Warner Bros. This is a legally relevant category within existing merger agreements, which gives the previous bidder another opportunity to make improvements. However, the two Netflix CEOs decided not to follow up. Warner is “nice to have”, but definitely not at any price.
Why there is hardly any problem under antitrust law this time
Paramount Skydance as the new owner is also considered less problematic under antitrust law, for several reasons. It is also a classic and modern media group, but with a much smaller streaming division than Netflix. Two classic studios would become one company, but a dominant platform provider would not be strengthened. The focus is on the strategic consolidation of classic studios as well as synergies in sports rights, production and distribution. Of course, before anything can actually be concluded, antitrust audits are still necessary. However, estimates suggest that the green light should be given within the coming months.
Political question marks
However, there remains a political question that keeps coming up in discussions. The broadcast network CNN is also moving to Paramount. Due to the critical reporting against Trump, the station is considered the president’s arch enemy – and the Ellison family, as the new majority owner (77.5 percent), is very close to Trump. Larry Ellison contributed most of the financial resources, and his son is in operational management. The concern is that CNN’s independence could be at risk.
Why Warner Bros wanted to be acquired in the first place
Warner Bros. Discovery was created in 2022 from the merger of WarnerMedia (AT&T) and Discovery. However, this also brought with it enormous debts of more than $40 billion, which meant significant pressure from interest charges, repayment obligations and limited strategic flexibility. The debt reduction had started successfully, but the business model remained capital intensive. A large portion of cash flows, however, came from cable channels and advertising revenue, with linear television shrinking faster than forecast. They were faced with the problem of losing on one front much faster than they could build on the other. Although Warner Bros was definitely not finished, it was still accompanied by a lot of uncertainty.
