The iconic 102-year-old Hollywood studio Warner Bros. Discovery has become the ultimate prize in a high-stakes corporate tug-of-war, with streaming giant Netflix and the newly merged Paramount Skydance locked in a battle that could exceed $150 billion. The outcome promises to drastically reshape the film, television, and streaming landscape, but experts warn a long and bumpy regulatory road lies ahead for any potential buyer.
The Bidding War: Netflix's $72B Offer vs. Paramount's Hostile $77.9B Bid
On Wednesday, Warner's board formally urged its shareholders to support a deal it has already struck with Netflix, valued at $72 billion, for its studio and streaming business. This includes legendary film franchises like Harry Potter and Superman, cable networks CNN and Discovery, DC Studios, and the HBO Max streaming platform.
However, this agreement is under direct threat from a hostile full takeover bid from Paramount Skydance, which is offering $77.9 billion. Paramount, which completed its own $8 billion merger with Skydance mere months ago, is another Hollywood legacy giant. Its bid aims to acquire all of Warner, which would combine two of the famed "big five" studios. Paramount's assets include blockbuster franchises like Top Gun, networks CBS, MTV, and Nickelodeon, and its Paramount+ streaming service.
The financial scale of the contenders varies wildly. Netflix is the behemoth with a market cap of around $430 billion as of mid-December. Warner Bros. Discovery is valued at approximately $70 billion, while the relatively new Paramount Skydance entity trails at about $14 billion.
Antitrust Hurdles and the Redefined "Market"
Any merger will inevitably trigger a rigorous review by the U.S. Justice Department, which could sue to block it or demand significant concessions. Other international regulators may also pose challenges. The process is expected to drag on for more than a year, if not longer.
Paramount has already positioned Netflix's streaming dominance as a key antitrust argument. It claims that putting Netflix and HBO Max under one roof would create "overwhelming" market share and crush competition. Netflix, in its defence, argues the merger would give consumers more choice through combined content libraries and plan options.
Antitrust experts like Northwestern University's Professor Jim Speta predict both companies will attempt to convince regulators that their real competition isn't just rival streaming subscriptions, but the entire online video universe. YouTube, owned by Google, is expected to be a central focus. Nielsen data shows YouTube accounted for nearly 13% of TV viewership this fall, compared to Netflix's 8%.
"The broader you make the market that we’re thinking about, the less the merger looks anti-competitive," Speta said. Both companies are likely to argue consolidation is "necessary for them to compete against YouTube."
Critics, however, warn of potential consumer harm. Scott Wagner, an antitrust lawyer at Bilzin Sumberg, noted that while libraries may broaden, a merged entity could wield power to control prices or create more subscription hurdles. He also warned that "the range of available content on the streaming services might decrease," with older films potentially getting shorter streaming windows.
Political Intrigue and Industry Implications
The battle is uniquely coloured by U.S. politics. Former President Donald Trump has stated he would personally "be involved" in the decision on whether a Warner buyout proceeds, a suggestion Professor Speta calls "completely unprecedented." Trump has called Netflix's deal "a problem" due to market share size and has a close relationship with Oracle founder Larry Ellison, whose son David is Paramount's CEO.
Meanwhile, Netflix has its own political links, with Trump previously praising its co-CEO Ted Sarandos. The political angle extends to news: a Paramount victory would put Warner's CNN and Paramount's CBS under one roof. Paramount has recently moved its news operations, like CBS, to appeal to more conservative viewers, a shift many expect would extend to CNN if the deal succeeds.
Beyond regulation and politics, the deals carry massive industry implications. A Paramount-Warner merger would consolidate major studio production power. While Netflix has agreed to uphold Warner's theatrical release commitments, its core reliance on direct-to-streaming models raises questions about the future of cinema.
Job losses from post-merger restructuring are a common concern. Furthermore, Paul Nary of Wharton warns of a "winner's curse," where the drawn-out process could leave Warner—which has underperformed since its creation three years ago—in worse shape if management is distracted. "Many of those deals end up failing," he cautioned, highlighting the high stakes and big egos in media mega-mergers.
Regardless of the victor, the new ownership of Warner's vast properties will send shockwaves through Hollywood, impacting everything from how movies are made and released to the very structure of the global media landscape.
