David Ellison’s Paramount Just Crashed Netflix’s Party With A $108B Power Play For Warner Bros — But Is It An Offer WBD Can’t Refuse?

• Paramount Skydance has submitted a hostile bid to acquire Warner Bros Discovery at an enterprise valuation of $108.4 billion.
• Warner Bros has said it is sticking to its Netflix deal but will review Paramount’s fresh terms.
• The market and analysts are already cautious about Netflix in response to Warner Bros.' deal, which was accepted on Friday. 

If HBO’s “Succession” taught viewers anything, it’s that Big Media deals are seldom clean or uncomplicated.

David Ellison’s Paramount Skydance on Monday submitted a $108-billion bid for Warner Bros Discovery, Inc., days after the latter accepted Netflix’s offer to acquire its streaming and studio assets for $72 billion – setting the stage for a high fireworks M&A.

Warner Bros said that it is sticking to its deal with Netflix, advising its shareholders “not to take any action at this time with respect to Paramount Skydance’s proposal.” Still, the board will “carefully review and consider Paramount Skydance’s offer in accordance with the terms of Warner Bros. Discovery’s agreement with Netflix, Inc.,” Paramount said in its statement.

NFLX closed 3.4% lower on Monday, its fourth straight day in the red, while PSKY gained 9%. Paramount’s retail investors think it has a high chance of clinching the deal, according to Stocktwits' explainer on Monday.

What Happens Now?

Paramount has essentially launched a tender offer to acquire WBD stock at $30 per share in cash, more than Netflix’s $27.75 per share cash-and-stock offer. During this time, any WBD shareholder can sell their shares to Paramount, and if Paramount buys 51% of the outstanding WBD shares, it would control the company. The tender offer will be open for 20 business days, with the option for extension.

Paramount’s offer is being funded by Affinity Partners, the investment firm led by Jared Kushner, President Donald Trump's son-in-law, alongside U.S. banks, private equity investors, and state-backed investment funds from the Middle East, Reuters reported.

The Ellison family (Paramount chairman David Ellison and his father, Larry Ellison, the co-founder of Oracle) is providing additional backing. To win over WBD, Paramount has argued that its bid is the stronger offer, that it stands a better chance of clearing regulators, and that it would preserve a consistent theatrical release slate for WBD films.

“Movies are one of America’s greatest exports. We want to lean into that legacy, not diminish it,” David Ellison said on the call with the press and investors on Monday, promising at least 30 theatrical releases annually. Netflix, on the other hand, has said “the (release) windows will evolve to be much more consumer friendly, to be able to meet the audience where they are quicker.”

The Trump Angle

Meanwhile, Trump has plugged himself into the deal discourse. Although he has so far avoided publicly backing a bidder, he hinted that the Netflix deal could be a problem given its high share in the streaming market. About the bidders, “None of them are particularly great friends of mine,” he said at a White House roundtable on Monday. 

The Wall Street Journal reported, citing a person close to Trump, that the president would want Paramount and Netflix to compete for his approval of a deal.

Meanwhile, analysts are looking at the Netflix deal with some concern for the streamer. Rosenblatt Securities lowered its price target on Netflix to $105 from $152 on Monday, while maintaining a Neutral rating on the streaming giant’s stock, citing "an extended period of uncertainty and risks" associated with the major acquisition.

Pivotal Research downgraded Netflix to ‘Hold,’ also citing risks, including the significant breakup fee. Canaccord Genuity reaffirmed its Buy rating on Netflix, emphasizing the deal's strategic advantages.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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