After six earlier bids from Paramount, which included a position for Warner Bros. CEO David Zaslav as new Co-CEO, Netflix reached a deal to buy WB for $72 billion in cash and shares through an ultimatum. However, Paramount countered with an all-cash bid of $108 billion directly targeted at WB's shareholders in an attempt to acquire atleast 51% of the shares and push a merger through. While Netflix seeks to just acquire the Studios & Streaming assets, Paramount aims to take over the company’s Linear Global Networks as well. Each acquisition has its own pros and cons.
According to Netflix co-CEO Ted Sarandos, the acquisition is a strategic move that fits their long-term vision, and that ''these assets are more valuable in our business model, and our business model is more valuable with these assets." He assures that WB's theatrical pipeline will continue to exist, and emphasizes the deal unlocks new opportunities for growth and global reach for WB content. This could mean Netflix becomes an all-in-one service provider that also features comics, music and gaming. He insists ''this deal is pro-consumer, pro-innovation, pro-worker, pro-creator, pro-growth.''
Netflix was so sure, they even sent an email to users about it. However, Paramount reacted with an all-cash bid that offers ''higher overall value, greater certainty, a clearer regulatory path and a future that is pro-Hollywood, pro-consumer and pro-competition.'' Concerns over the offer exist however, as is its a mix of financial backers, including foreign investors. In response, Sarandos said: ''Today’s move was entirely expected. We think [our deal]’s great for our shareholders. It’s great for consumers. We think it’s a great way to create and protect jobs in the entertainment industry.''
Concerns, responses and safeguards
A general concern is that one player would gain too much power, jobs will be lost, and subscription fees rise even more. Against Netflix, major Hollywood unions and cinema groups argue creative freedom and the theatrical ecosystem will be threatened. Moreover, Netflix' current model could also underminde the home release ecosystem. Paramount CEO David Ellison even said ''the Netflix-WB deal would spell the death of the theatrical movie business.'' In case of Paramount, their political ties and foreign investments raise issues around influence, governance, and even national security.
To address issues concerning the theatrical model, Ellison says ''Paramount is committed to growing the film and TV output of both businesses.'' Meanwhile, Sarandos says that they're ''deeply committed to releasing [WB's] movies exactly the way they’ve released those movies today.'' He did imply the windows could become shorter and more "consumer-friendly" though. A safeguard could be keeping WB, including Pictures, Animation, Television, Distribution, Music, Games, and Parks operating on it's own. This way, partnerships and less interesting assets won't fall under their portfolio.
Another issue is that, if combined, HBO and Netflix have over 400 million subscribers and would dwarf any competition. Sarandos reassures though that "we talk about keeping HBO operating, largely as it is," including their movie deal with WB. He doesn't say for how long, but that could be enforced through anti-trust laws. As such, HBO keeps all WB content, Netflix adds New Line Cinema, Castle Rock and Turner, and DC (Studios & Comics) keeps operating independently. Alternatively, Paramount+ could fold into HBO, allowing it to compete with Disney+ and Prime Video in subscribers.
With Paramount aiming to acquire all assets of Warner Bros Discovery, they argue their proposal is stronger and benefits shareholders. However, it can also be claimed that the shares Netflix pay with lead to more value in the long run. Especially if the acquisition leads to growth rather than a feared industry collapse. Either way, if Paramount acquires Discovery, the company could gain too much influence over cable networks. This is particularly concerning in the news sector, where CNN could become another channel like Fox News. Either acquisition thus leads to potential monopolies.
Regardless, it will be up to shareholders and regulators to see a deal through. Netflix offers less value per share, but comes with a single-company bid. Paramount offers an all-cash proposal that is called “cleaner,” but the cleanliness of the money itself is debatable and misleading. Both companies do guarantee to keep WB operating, but Paramount does have a better chance with the FCC as both have a close relationship with the Trump administration. In the end, neither deal is straightforward and will force the market to react. Maybe Peacock will finally be rolled out internationally too.