He agreement to purchase Warner Bros Discovery by Netflixvalued at $82.7 billion, has unleashed a high-voltage business and political battle in Hollywood.
Last week, the global streaming platform closed an agreement to acquire Warner studios and its HBO Max service, in what would be one of the largest operations in the history of entertainment.
According to the Financial Times, the Netflix deal values Warner’s studio and streaming assets at $27.75 per share. The transaction does not include cable television businesses, such as Discovery and CNN, which Warner plans to spin off next year.
The operation was closed after a three-month auction process, which began with a first offer from Paramount, which ultimately failed.
However, the scenario took an unexpected turn. Paramount has now launched an offer for US$108 billion to buy all of Warner Bros Discovery, in association with Middle Eastern sovereign wealth funds and Jared Kushner, son-in-law of President Donald Trump, with the aim of frustrating the agreement already signed between Warner and Netflix.
Paramount’s offer has been described as “hostile,” as it did not have the approval of Warner’s board of directors or management. The proposal considers an all-cash purchase and values the company at US$30 per share.
According to Paramount, this represents “US$18 billion more in cash than the consideration agreed to with Netflix.”
Despite this, Warner’s board of directors decided to lean towards Netflix’s proposal, considering that it offered greater certainty of closure and better conditions against regulatory risk.
“The board’s priority, even above the valuation, was to choose a bidder capable of signing immediately, passing regulatory scrutiny and closing under the required terms,” a source close to Warner told the Financial Times.
What does Netflix gain?
If the operation is completed, Netflix would be in charge of one of the most emblematic studios in Hollywood. The transaction would allow him to control franchises such as Harry Potter, Batman and Superman, in addition to HBO, home of series such as Game of Thrones, The White Lotus and Succession.
If Warner breaks the agreement, it would be obliged to pay a penalty of US$2.8 billion.
Paramount’s strategy
Paramount is now seeking to convince Warner shareholders by casting doubt on Netflix’s ability to obtain approval from competition authorities. The platform estimated that the regulatory process could take between 12 and 18 months, which Paramount called an “unrealistic assumption.”
David Ellison, CEO of Paramount and son of Oracle founder Larry Ellison, said that if Netflix acquires Warner “there will be no more competition in Hollywood.” He added, in an interview with CNBC, that Trump would support the “more competitive” deal.
The Ellison family and RedBird Capital Partners committed to cover the US$40.7 billion of capital required for the operation. Financing would also come from sovereign wealth funds from Saudi Arabia, Abu Dhabi and Qatar, as well as Affinity Partners, Kushner’s fund.
Added to this is debt financing for US$54 billion committed by Bank of America, Citigroup and Apollo.
Paramount further reported that these investors gave up governance rights, such as board seats, to avoid national security reviews. Despite having submitted six proposals in 12 weeks, the company maintains that Warner “never engaged in meaningful dialogue” and decided to take its offer directly to shareholders.
Opponents and conflict of interest
The decision to sell to Netflix had already generated rejection from powerful Hollywood unions and also caught the attention of President Donald Trump, who announced that he will participate in the review of the operation.
However, the role of Jared Kushner, Trump’s son-in-law, as a financial ally of Paramount has raised alarms about a possible conflict of interest, since an eventual ban on the agreement with Netflix would directly benefit a company linked to the president’s family environment.
Trump stated that the acquisition “could be a problem” due to Netflix’s high market share. There are concerns that combining HBO Max with Netflix could push the company over the 30% market share threshold in the United States.
Netflix has questioned that calculation and maintains that competition should also be analyzed considering platforms such as YouTube. According to Nielsen, Netflix represents 8% of total television viewing time in the United States, behind YouTube, Disney and Paramount.
According to US media, the merger would not be completed before the third quarter of 2026 and will be subject to regulatory approvals in the United States and Europe, in addition to a review by the Department of Justice.
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