Netflix sent shockwaves through the entertainment industry with its $82.7 billion bid to acquire Warner Bros. Discovery’s film, TV, and streaming operations on 5th December. The deal, valued at $27.75 per share, marks one of the most important shifts in entertainment this century. But there were more shockwaves to come as Paramount responded with a surprising $108.4 billion hostile takeover bid just days later.
Warner Bros. Discovery’s board had signaled its willingness to sell the company in October after months of market speculation. The media giant’s struggles with $35 billion in debt had limited its ability to pursue long-term strategic plans. The merger between Warner Bros. and Discovery Networks left the combined company vulnerable as cable TV revenue plummeted and HBO Max and Discovery Plus streaming services continued to lose money. Netflix believes it can save between $2 billion and $3 billion annually by the third year after completing the acquisition.
The Deal
On 5th December, Netflix announced a landmark deal to buy Warner Bros. Discovery’s film and television studios, HBO Max, and HBO. The deal values at $82.7 billion in total enterprise value. The agreement would see WBD shareholders receive $23.25 in cash and $4.50 in Netflix stock per share. This values Warner Bros. at $27.75 per share with a $72 billion equity value.
The merger would bring together two entertainment giants. Netflix’s global streaming presence will combine with Warner Bros.’ rich storytelling heritage. The deal would add iconic franchises like DC Universe, Harry Potter, and Game of Thrones to Netflix’s successful shows like Stranger Things and Squid Game.
“I know some of you are surprised that we’re making this acquisition,” acknowledged Ted Sarandos, Netflix co-CEO. “Over the years we have been known to be builders, not buyers. But this is a rare opportunity”.
The deal needs regulatory approvals and carries a $5.8 billion breakup fee. Netflix plans to save $2-3 billion yearly by the third year after closing.
Following the news, the market reacted quickly. Netflix shares dropped more than 2% in early trading, while Warner Bros. Discovery stock rose 2%. It is rumoured that the deal should close after WBD finishes its planned separation of Discovery Global, predicted for Q3 2026.
Why is Warner Bros. Selling its Entertainment Assets?
Warner Bros. Discovery was in a financial bind that ended up forcing the sale. The company struggled with a massive $35 billion debt that limited what it could do. The 2022 merger between Warner Media and Discovery created this financial burden. The merger didn’t help things – it led the company “straight into a perfect storm” when revenue from traditional cable TV fell apart.
The company’s original plan came in June 2025. WBD wanted to split into two parts – one would handle TV, film studios, and HBO Max, while the other would run the Discovery business with its cable TV channels. CEO David Zaslav believed this split would give them “sharper focus and strategic flexibility” to compete in today’s changing media world.
The board liked Netflix’s offer better since it brought quick results compared to other bids. Paramount tried to sweeten the deal by offering $30.00 per share for the whole company, which valued it at $78 billion, but the Warner Bros. board worried about the money behind it. JPMorgan Chase had told Zaslav to think about changing the planned split order, which would make it easier to sell the studio assets.
The Netflix deal made the most financial sense, as it was worth $8 billion more just for Warner’s assets, not counting the cable properties. The board picked this option out of both necessity and smart business thinking in an industry where streaming now rules.
Paramount’s Counteroffer
Paramount made a move on 8th December with a $108.4 billion takeover bid for Warner Bros. Discovery just days after Netflix announced its acquisition plans. The company went straight to shareholders with an all-cash offer of $30 per share, completely bypassing WBD’s management.
The aggressive counteroffer from Paramount is a big deal as it surpasses Netflix’s bid by about $18 billion. On top of that, it aims to buy the entire company, including the global networks division that Netflix doesn’t want.
The bid’s funding comes from multiple sources, with the Ellison family fortune and RedBird Capital leading the way. The deal has support from Saudi Arabia, Qatar, and the United Arab Emirates’ sovereign wealth funds, among other backers like Jared Kushner’s Affinity Partners.
David Ellison, Paramount’s CEO, explained the aggressive approach. The company had put forward six proposals over 12 weeks, but Warner Bros. “never engaged meaningfully with” them. He claimed Paramount’s offer brings “superior value, and a more certain and quicker path to completion”.
WBD’s board ended up saying they would review Paramount’s offer within 10 business days. Warner Bros. would need to pay Netflix a hefty $2.8 billion breakup fee if they choose Paramount’s bid. The tender offer will expire on January 8, 2026, unless extended.
What Will Happen Next?
Both deals face major roadblocks. Nobody knows if regulators will approve these deals, given how much market power the combined companies would have. The huge breakup fees tied to these agreements show just how serious all parties are about getting this done.
If there were to be a winner, who would that be? Netflix seemed to have struck an agreement until Paramount jumped in with its shock counterbid. Warner Bros. Discovery’s board now faces immense pressure to get the best deal for shareholders while protecting their entertainment properties.
But whoever comes out on top, this corporate battle is set to make a massive impact on the entertainment industry. Fans might see their favorite franchises come together under one roof, which could spark creative possibilities. But it also raises valid concerns about too much media power in too few hands.
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