Paramount Launches Bid for Warner Bros, Challenging Netflix

On Monday, Paramount Skydance formally submitted a hostile takeover bid for Warner Bros Discovery (WBD) valued at US$108.4 billion. This all-cash offer arrives three days after the target company announced a definitive merger agreement with Netflix, initiating a high-stakes corporate battle for control of Hollywood legacy assets.

"The Warner Bros. Discovery acquisition is far from over. We will be the largest investor in this deal. We are literally sitting here today because we are fighting for our shareholders, and we are also fighting for the shareholders of Warner Bros Discovery. WBD shareholders deserve the opportunity to consider our excellent offer in cash for their shares of the whole company," says David Ellison, CEO, Paramount Skydance.

The offensive move by Paramount Skydance seeks to disrupt the existing agreement between Netflix and WBD by leveraging superior immediate liquidity and arguing for greater regulatory certainty. Paramount management argues that the WBD board disregarded previous overtures due to a preference for the streaming giant

The Netflix Agreement

The hostile bid serves as a direct counter-measure to the announcement made on Dec. 5, 2025, in which Netflix and WBD revealed a definitive agreement valued at about US$82.7 billion in enterprise value. Under the terms of that initial deal, Netflix would acquire the Warner Bros. film and television studios, HBO, and HBO Max.

This transaction is contingent upon WBD completing the spinoff of its linear networks division into a new standalone public entity named Discovery Global. The Netflix proposal offers WBD shareholders US$27.75 per share, structured as US$23.25 in cash and US$4.50 in Netflix stock. The stock component includes a collar mechanism based on the 15-day volume-weighted average price (VWAP) of Netflix prior to closing.

Financial Structure and Valuation Discrepancies

Paramount Skydance has structured its competing offer to capitalize on the desire for liquidity among institutional investors. The hostile bid proposes US$30 per share entirely in cash, representing a premium over the mixed cash-and-stock offer from Netflix.

To fund this acquisition, Paramount Skydance has secured significant capital backing. According to reports from CNBC, the offer includes US$54 billion in debt commitments from a banking consortium that includes Bank of America, Citi, and Apollo Global Management. Furthermore, the bid is supported by equity financing from the Ellison family and the private equity firm RedBird Capital.

The market capitalization gap between the two suitors is substantial. Netflix holds a market value of roughly US$412 billion, while the entity controlled by Ellison is valued at about US$15 billion. However, the personal wealth of Larry Ellison, Co-Founder, Oracle, and father of David Ellison, provides the necessary collateral to support the Paramount offer.

Regulatory and Political Implications

The battle for WBD extends beyond financial metrics into the regulatory arena. The Netflix proposal includes a US$5.8 billion break-up fee, signaling anticipation of rigorous antitrust scrutiny. Industry analysts suggest that a Netflix acquisition of major studios and IP catalogs such as Harry Potter and the DC Universe would trigger significant opposition regarding market consolidation.

"Netflix is in the driver seat, but there will be twists and turns before the finish line. Paramount will appeal to shareholders, regulators, and politicians to try to stymie Netflix. The battle could become prolonged," says Ross Benes, Senior Analyst, Emarketer.

Political factors may influence the regulatory outcome. Sources cited by Bloomberg indicate that US President Donald Trump has raised questions regarding the Netflix deal. Conversely, the Ellison family maintains a relationship with the current administration. This dynamic suggests that a Paramount acquisition might face fewer hurdles from the Federal Trade Commission (FTC) or the Department of Justice (DOJ) compared to the vertical integration proposed by Netflix.

Corporate Governance and Board Dynamics

Paramount Skydance has publicly criticized the governance process at WBD. In its communications, the company alleges that the WBD board refused to entertain six previous proposals submitted over the last 12 weeks. Paramount Skydance claims this indicates a bias that compromises shareholder value.

Ellison argues that the board is steering the company toward a proposal that exposes shareholders to a "complex and volatile mix of capital and cash," as well as the uncertainty of the Discovery Global spinoff. The spinoff is not expected to conclude until the third quarter of 2026, which adds a timeline risk to the Netflix deal that the Paramount all-cash offer eliminates.

Following the news of the hostile bid on Monday, WBD shares rose 8% to US$28.16. This price point sits between the Netflix offer of US$27.75 and the Paramount offer of US$30, indicating that the market has not yet fully priced in the success of the hostile takeover but acknowledges the increased value floor.

If Paramount Skydance succeeds, the merger would consolidate WBD assets like CNN, TNT Sports, and the Warner Bros. studio lot with Paramount’s existing portfolio, which includes CBS, MTV, and Nickelodeon. This combination would create a massive traditional media conglomerate with a strengthened position in linear television and theatrical releases.

Conversely, the Netflix strategy relies on integrating the WBD IP vault to reduce reliance on third-party licensing and to bolster its expansion into gaming and consumer products. Ted Sarandos, Co-CEO, Netflix, says that the company is "highly confident" in the regulatory process and that the deal would drive long-term value for consumers.

The WBD board of directors faces immediate pressure to respond to the offer. They must determine whether to reaffirm their recommendation of the Netflix transaction — citing the potential US$2 billion to US$3 billion in annual cost synergies — or to engage with Paramount Skydance to avoid shareholder litigation regarding their fiduciary duties.

Paramount Skydance has indicated it will take its offer directly to the WBD shareholders, bypassing the board if necessary. This sets the stage for a proxy battle that will likely dominate the media industry narrative throughout the first half of 2026.