The high-stakes battle for Warner Bros, explained in 5 charts

However, three days later, Paramount Skydance, led by CEO David Ellison (son of billionaire Larry Ellison), launched a hostile bid for the entire company, valuing WBD at roughly $108 billion. Ellison bypassed the WBD board, appealing directly to shareholders. The fight is now turning political, with unions voicing their opposition US President Donald Trump getting involved.

Impact on stocks

Netflix valued WBD’s equity at about $72 billion, or $27.75 per share, offering $23.25 in cash and $4.50 in Netflix stock. The offer excluded WBD’s debt-heavy cable networks, including CNN and TNT, which would be spun off into a new public company, Discovery Global.

Paramount accused WBD’s board of ignoring six superior offers and conducting a biased process that favoured Netflix. In an open letter, Ellison highlighted the strength of Paramount’s all-cash bid, its cleaner regulatory path, and its plan to keep WBD intact by merging HBO Max with Paramount+, its streaming platform. WBD’s board must respond to Paramount by 18 December, but switching suitors would require paying Netflix a $2.8 billion breakup fee.

WBD shares rose about 6% after the Netflix announcement, reflecting the premium over pre-auction levels. Netflix shares fell roughly 3%, driven by concern over the $59 billion of debt needed for the deal and the shift toward buying rather than producing content. Paramount shares initially fell nearly 10% after losing the board auction but rebounded 7-9% once its hostile bid was launched.

Why Warner prefers Netflix bid

Financially, Netflix is in a stronger position to fund and absorb WBD, a reason why the board preferred its bid. Netflix generated $39 billion in revenue in 2024 and $10.4 billion in operating profits. It has steady cash generation and an investment-grade credit rating, which helped it secure a $59 billion unsecured bridge loan from banks including Wells Fargo, BNP Paribas, and HSBC to fund the cash portion of its bid.

Paramount has smaller revenues and profits. It has secured about $54 billion in debt commitments and assembled an equity consortium that includes the Ellison family, RedBird Capital, and sovereign wealth funds from Saudi Arabia, Abu Dhabi, and Qatar. Jared Kushner’s Affinity Partners is also a backer.

This reliance on debt and foreign capital introduces layers of risk for Paramount. While Netflix has said it plans to deleverage quickly using its substantial cash flows, Paramount’s bid involves higher relative leverage and political exposure due to foreign funding sources.

Streaming king

Netflix is currently the dominant subscription-based streaming service worldwide, with 301 million users. Combining its user base with HBO Max’s 128 million subscribers would give the merged entity control of about 30% of the US subscription streaming market and an estimated 40% globally.

Critics, including the Writers Guild of America, argue that this vertical integration, combining a top distributor with a major content producer, would reduce the number of buyers for scripts and reduce creators’ bargaining power. Netflix has countered this by saying its share is lower since the relevant market includes video platforms such as YouTube and TikTok.

President Trump has said Netflix’s dominance “could be a problem” and indicated he would be involved in a government review. Netflix has agreed to pay WBD $5.8 billion if the deal fails due to regulatory or other reasons, signalling its awareness of the regulatory hurdles and its confidence in overcoming them. Meanwhile, Paramount has leveraged its political connections, arguing its bid poses fewer antitrust risks.

Cinema fallout

The news of Netflix buying a major film studio has rattled US cinema chains. Shares of AMC, Cinemark, and IMAX fell 2% to 8% after the deal was announced. Warner Bros typically releases 15 to 20 films a year for wide theatrical distribution, representing a significant share of the domestic box office. Exhibitors worry Netflix will prioritize streaming over cinemas, reducing footfall and concession revenue.

Cinema United, a trade group for theatre owners, called the deal an “unprecedented threat”, warning that up to 25% of the annual domestic box office could vanish if Warner Bros. titles bypassed theatres. Their concerns reflect Netflix’s history of using cinemas mainly for limited runs tied to awards or marketing rather than broad, long-window releases.

Netflix executives have said they will maintain Warner Bros.’ current operations, including theatrical distribution. Co-CEO Ted Sarandos said the company has no “opposition to movies into theatres”. Still, unions and producers remain wary, fearing these assurances may not endure as Netflix integrates the studio.

Spending shift

The takeover battle marks a shift from the era of high spending on growth to one of consolidation. During the “streaming wars”, companies such as Netflix, Disney and Warner poured tens of billions of dollars into growing subscribers, often at the cost of profits. But with subscriber growth slowing and pressure to generate cash flows increasing, consolidation now looks inevitable. Industry-wide, content spending grew less than 4% in both 2023 and 2024, down sharply from 13% and 21% in the previous two years.

With this, Netflix’s strategy has started to shift from making movies and shows in-house to acquiring proven libraries. Warner’s long-running franchises, including Harry Potter and Game of Thrones, fill a major gap and will help Netflix boost engagement without having to depending entirely on creating new hits.

Paramount’s counter-bid is driven by survival, as it lacks the scale to compete on its own against larger, tech-backed players. A combined Netflix–Warner group would likely cut total content spend, raising concerns about reduced creative variety and employment.

With WBD shareholders facing a January tender deadline, the final outcome depends on whether they prefer immediate cash or the uncertain upside of a Netflix deal over the long term.

www.howindialives.com is a database and search engine for public data.