The acquisition of Warner Bros Discovery has evolved into a clash of titans, pitting Netflix against the billionaire Ellison family. Netflix is reportedly switching to an all-cash offer for its $83 billion purchase of WBD’s entertainment assets, a tactic designed to defeat a hostile $108.4 billion bid from Paramount Skydance, which is controlled by the Ellisons.
Larry Ellison, the tech mogul behind Oracle, has backed Paramount’s bid with a $40 billion personal guarantee. Despite this, WBD’s board has rejected the offer as “inadequate,” pointing to the high leverage and debt involved. In a bid to bypass the board’s refusal, Paramount is planning a proxy fight to nominate new directors who would support their takeover attempt.
Netflix’s response is to make its own deal faster and simpler. By offering all cash for WBD’s studios and streaming service, Netflix removes the uncertainty associated with stock swaps. This allows WBD shareholders to cash out on the company’s most valuable assets, including HBO, while retaining ownership of the spun-off cable networks like CNN and Discovery.
The corporate drama is playing out against a backdrop of political scrutiny. Lawmakers in Washington are concerned that a Netflix-WBD merger would stifle competition, creating a behemoth with nearly half the streaming viewership. This political pressure adds urgency to Netflix’s efforts to finalize the deal before regulatory headwinds become too strong.
Investors seem to favor Netflix’s approach. WBD shares closed higher on Tuesday, suggesting that the market values the certainty of Netflix’s cash over the potential risks of the Ellison-backed proposal. As the two sides maneuver, the future of Hollywood’s most iconic studios hangs in the balance.
