Paramount Skydance announced this Monday (8), in Nova York, a hostile offer for the total acquisition of Warner Bros Discovery for US$ 108.4 billion, equivalent to US$ 30 per share in cash. Essa proposal aims to overturn the preliminary agreement reached on Friday (5) between Netflix and Warner, valued at US$82.7 billion for specific parts of the assets, including studios and streaming. The initiative comes amid a months-long bidding war, driven by the need for consolidation in the digital entertainment sector, where streaming dominates the global market.
Paramount executives argue that their offer guarantees more immediate value to Warner shareholders, with $18 billion more in cash compared to the cash and stock mix proposed by Netflix. Warner Bros Discovery, owner of brands such as HBO, CNN and franchises such as Batman and Harry Potter, has faced financial pressures since the 2022 merger, which accelerated the sale process.
The board of Warner stated that it will evaluate Paramount’s proposal within ten working days, without changing for now the recommendation in favor of Netflix. Analistas anticipate the dispute could drag on for months, subject to regulatory scrutiny in the US and Europa.
- Main assets involved: HBO Max (120 million subscribers), studios Warner Bros and linear channels such as CNN and TNT.
- Financing of Paramount: US$40.7 billion in equity from the Ellison family and RedBird Capital, plus US$54 billion in debt from banks such as
- Initial market reaction: Ações of Warner rose 4.3%; Paramount gained 8.5%; Netflix fell 3.9%.
Proposal details
Paramount Skydance’s offer represents a hostile takeover, aimed directly at Warner Bros Discovery’s shareholders, without the initial approval of the target company’s board. David Ellison, CEO of Paramount, highlighted in a statement that the pure cash bid avoids risks associated with volatile stocks, as in the agreement with Netflix.
This strategy differs from Netflix’s user-friendly approach, which involves $23.25 in cash and $4.50 in shares per Warner post-straight-line asset split. Paramount estimates that its transaction will increase total enterprise value to US$108.4 billion, incorporating existing debt.
Financing is guaranteed by investors such as the Ellison family, sovereign wealth funds of Arábia Saudita, Catar and Abu Dhabi, in addition to Affinity Partners, linked to Jared Kushner, son-in-law of president Ellison mentioned in an interview with CNBC that the plan preserves Warner’s integrity as a “creative champion” in the industry.
Bidding war context
The dispute began in September, when Paramount Skydance initiated unsolicited bids for Warner, seeking scale to rival giants such as Netflix and Disney. Warner, with a century-old catalog that includes classics like Casablanca and series like Succession, saw its valuation drop due to the migration to streaming.
Netflix, a global leader with 300 million subscribers, won the initial auction on December 5, focusing on studios and HBO Max to bolster its original content. However, Paramount rejected six previous proposals, citing a lack of engagement from the Warner board, led by David Zaslav.
Analysts at Quilter Cheviot point out that Paramount needs this agreement more to add 120 million HBO Max users to its 79 million on Paramount+. The potential merger would benefit traditional channels, such as CBS and Nickelodeon, with greater negotiating power on rights.
The recent chronology includes rejections of bids of US$23.50 and US$26.50 per share for Paramount, culminating in the current one of US$30. If accepted, the transaction would close in 10 to 12 months, compared to 12 to 18 months estimated for Netflix.
Reactions in the financial market
Shares of Warner Bros Discovery registered an increase of more than 4% at the opening of the exchange at Nova York this Monday, reflecting optimism with the valuation proposed by Paramount. Já shares of Paramount Skydance rose 9%, driven by confidence in robust financing.
On the other hand, Netflix shares fell 3%, due to fears of prolonging the process and potential additional costs. Investidores see the hostile bid as a factor of uncertainty, but also as an opportunity for capital gains.
Trading volume increased 150% for Warner, with eMarketer analysts predicting volatility pending the board’s official response. The market value of Warner, which has fallen 30% since January, could recover with consolidation.
A report from Reuters indicates that Paramount plans to integrate talent from both companies, preserving 80% of current executives to maintain content production.
Regulatory and political concerns
Antitrust bodies in Estados Unidos, such as Departamento of Justiça, and Europa will scrutinize any agreement to assess impacts on competition. Paramount argues that its proposal is pro-consumer, avoiding the 43% dominance of the SVOD market that Netflix would achieve.
President Donald Trump expressed reservations about the agreement with Netflix, citing risks to content diversity. In a post on Truth Social, he criticized Paramount for an interview on 60 Minutes, but praised conversations with David Ellison about the business.
The proximity of the Ellison family to Trump, including political donations, can facilitate approvals, unlike Netflix, which has never made large-scale acquisitions. Reguladores will focus on negotiations with advertisers and TV distributors.
Warner would pay US$2.8 billion in breakup fees to Netflix if it chose Paramount, while the reciprocal fee would be US$5.8 billion.
Streaming giants’ strategies
Netflix seeks the acquisition to expand its catalog with 100 thousand hours of Warner content, including franchises such as Harry Potter and DC Comics, strengthening its position in emerging markets. Executivos from the company, in a conference on Monday, defended the plan as positive for Hollywood, without massive job cuts.
For Paramount, the focus is on the survival of linear broadcasters, such as Comedy Central and Food Network, which face a 15% decline in annual revenues. Integration with Warner would create cost synergies estimated at $2 billion per year.
Both proposals include spinning off assets like CNN into an independent entity in 2026, avoiding regulatory conflicts with TV licenses. Analistas of Variety predict that the winner will control 20% of the global entertainment market.
David Ellison warned that the agreement with Netflix would concentrate excessive power, harming independent actors and creators.
Benefits for the media sector
The consolidation proposed by Paramount would bring together 200 million subscribers, increasing projected revenue to US$50 billion annually. Isso would allow investments in original production, with a focus on prestige series like The Sopranos and superhero films.
For Warner sports channels, such as TNT Sports, the merger would bring greater access to broadcast rights, competing with ESPN. Paramount plans a “best-of-both” approach, combining technology from Skydance with legacy Warner.
In the long term, the transaction could stabilize the sector, reducing losses of US$10 billion in pay TV over the last two years. However, unions in Hollywood monitor impacts on 50,000 jobs.
The dispute highlights the digital transformation, where streaming represents 60% of US media revenues. Paramount aims to create a hybrid ecosystem, integrating linear and on-demand for audience retention.
This battle reflects global challenges, with the SVOD market growing 12% annually, but pressured by content costs that will rise 20% by 2025. The resolution will define the future of on-screen storytelling, balancing innovation and tradition in a billion-dollar industry.
