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Paramount launches rival bid for Warner Bros Discovery
Paramount Global, backed by the Ellison family, has submitted a new offer to acquire Warner Bros Discovery for $30 per share, challenging Netflix's earlier winning bid. The proposed deal values Warner Bros at $108.4 billion, including debt, and promises shareholders more upfront cash than Netflix's $83 billion offer.
Netflix's bid faces regulatory and political scrutiny
Warner Bros Discovery announced last Friday that Netflix had won its auction to purchase its studio and streaming networks, including HBO. However, Paramount's latest bid introduces fresh uncertainty. President Donald Trump has raised concerns about Netflix's potential acquisition, citing competition risks due to the combined size of the companies.
Paramount's bid, described by its backers as a "superior alternative," aims to avoid regulatory hurdles by preserving competition in the media industry. Larry Ellison, a Republican megadonor and key figure behind Paramount's bid, argued that Netflix's takeover would concentrate too much power in one company, harming Hollywood's ecosystem.
"It's a horrible deal for Hollywood," Ellison said in a CNBC interview, adding that he had discussed the matter with Trump and believed the president prioritized competition.
Strategic motivations behind Paramount's offer
Analysts suggest Paramount's bid is driven by a need to achieve scale and cost efficiencies, particularly for its traditional television networks. The company has partnered with Jared Kushner, Trump's son-in-law, as part of its financial strategy, according to filings with the Securities and Exchange Commission.
Ellison criticized Warner Bros' plan to spin off its traditional networks, including CNN, into a separate entity, calling it a mistake that would weaken their value. "I think [its shares are] going to be worth a lot less than people are claiming," he said.
Market reacts to shifting takeover battle
Warner Bros Discovery's shares surged over 6% in early trading on Monday following Paramount's announcement, while Netflix's stock dropped more than 3%. Paramount's shares also rose, reflecting investor optimism about its bid.
Netflix, the world's largest streaming service with over 300 million subscribers, has defended its acquisition as a strategic move to bolster its content library and fend off competitors. However, analysts at Raymond James noted that over 70% of HBO Max subscribers in the U.S. also use Netflix, raising questions about the long-term benefits of the deal.
"Paramount ultimately needs this deal more than Netflix," said Ben Barringer, head of technology research at Quilter Cheviot. "Paramount remains a legacy entertainment provider that lacks the scale required for the modern age."
Regulatory hurdles loom for both bids
Any takeover of Warner Bros Discovery will face intense scrutiny from U.S. and European competition regulators. While Paramount's ties to Trump and Kushner may ease some political resistance, the sheer size of the proposed deals ensures a complex approval process.
Analysts expect further developments in the coming weeks, with more twists likely as the battle for Warner Bros Discovery unfolds.
