Netflix vs Paramount: Warner's $108B Heist

Every story starts somewhere, and this one started with four penniless Polish brothers and the American Dream. From hustling nickelodeons  (five-cent storefronts screening silent films) to now causing one of the greatest bidding wars in history, this is the story of Warner Bros. and what is to come of their future. And how what was once a Hollywood empire, is currently hanging in the balance of Netflix’s streaming empire and Paramount’s Oracle-backed cash. What’s next for Batman, Superman, Harry Potter and other characters from our childhood that always manage to hit us with a deep-rooted sense of nostalgia?

The Warners opened up their first Nickelodeon in 1903, scavenging for pennies, but they took their first real risk and established themselves as giants of the industry in 1927, when their high-risk-high-reward plan of launching the first sound-based film, ‘The Jazz Singer,’ paid off. And from then on, the sky was the limit. They branched into gangster classics, Looney Tunes cartoons, Casablanca epics, and even acquired the billion-dollar blockbuster DC Comics. They created the first ‘premium cable’ channel (HBO) with no ads, just subscriptions, and used satellites to beam it across the nation. They revolutionised TV as fans realised they could watch their Muhammad Ali fights from the comfort of their couches. 1990 marked the beginning of their corporate rollercoaster when Time Warner was formed through the merger of Warner Bros. and Time Inc., with the goal of gaining cable and content power, thereby forming the largest media conglomerate of its time. Time Warner then moved on to acquire Ted Turner’s 24/7 News Channel (CNN) for $7.5 billion, and for the first time in history, it streamed news across the nation, which proved useful during the Gulf War, making CNN the news channel everyone would turn to.

Time Warner thrived through the early 2000s, but the real death spiral was when one of the largest US telecoms bought Time Warner. Hoping to control both content and distribution, AT&T just didn’t understand Hollywood, proving to be its most vital flaw. There was a major shift to streaming platforms and global OTTs as they exploded to a rough estimate of 100 billion dollars, and WarnerMedia, in its desperation to keep up, launched HBO Max in 2020. Already late to the streaming war and in the peak of the  Lockdown, they launched with massive bugs and administrative issues, causing a yearly loss of $4-5 billion. After realising this flop, AT&T dumped WarnerMedia and merged with Discovery to form Warner Bros. Discovery, a company born with a $41B debt from its ancestors. Its CEO, David Zaslav, took over and immediately started cost-cutting, the WBD ‘bloodbath’ as they called it. He took a mass-appeal gamble for the rebranding of HBO Max to Max, which caused an immediate loss of 1.8 million subscribers, an all-time low. WBD continued to bleed for the next 18 months: they admitted that the value of their cable networks caused them losses instead of revenue due to the world’s shifting demands away from cable, spent $11.5 billion more than they earned, and lost NBA Basketball broadcast rights. Their break-up value (the value of their individual assets) was worth more than their stock price,  and this caused severe panic on Wall Street. Thus, the bidding war ensued.

After Paramount’s merger with Skydance and its subsequent funding from Oracle, they hoped to acquire WBD to expand their media influence. They lowballed an offer to Warner Bros. Discovery at $19 per share in September, to $22 per share, and finally $23.5 per share in mid-October, all of which were rejected by WBD shareholders for undervaluing assets. Paramount believed they were the only major powers in the game, and their overconfidence left them to fall prey to a much quieter, and in my opinion, stronger bidder — Netflix. Though seemingly disinterested and quiet when it came to matters concerning WBD, they worked behind the scenes and struck a deal with WBD covering Warner Bros. Studios, Max streaming, and DC Comics, promising $2-3 billion in annual savings, with the only drawback being that WBD will face a potential $5.8 billion breakup fee if it ends up getting blocked. Once the deal was announced on the 5th of December, just a few days later, Paramount made a hostile all-cash bid of $108 billion, offering $30 per share as opposed to Netflix’s $27. 

As the dust settles on this historical bidding war, WBD’s fate, and the future of our favourite childhood icons, lie in the hands of Board deliberations due by late December 2025. With Netflix’s streaming synergies and its promise of upscaling iconic franchises with its 420 million subscribers clashing against Paramount's theatrical ambitions and Oracle-fuelled cash (risking debt at the same time), whichever prevails, this merger monopolises Hollywood into fewer and mightier giants. At the same time, giving way to anti-trust scrutiny, and potentially forcing asset sales that fragment the empire the four Polish brothers worked so hard to build. WBD's sale will be a big pivot for the entertainment industry. Netflix and Paramount, both, are putting their hats in the ring, ensuring one thing: that this battle royale is far from its end! And it is as they say, this is just the beginning, albeit a beginning of the end of WB as we know it.