Paramount Warns Netflix Deal For Warner Bros. Discovery Would ‘Never Close’ Amid Regulatory Hurdles: Report

• Paramount says its bid faces fewer regulatory risks than rival offers.
• Netflix’s global scale was cited as the key reason regulators would be unlikely to approve its bid.
• Warner Bros. Discovery has asked for updated proposals by Thursday.

The fight for Warner Bros. Discovery intensified after Paramount reportedly told Warner’s lawyers in a Monday letter that a sale to Netflix would “never close” because of regulatory hurdles tied to its global dominance. 

Paramount insists it offers the cleanest approval path compared with Netflix and Comcast, which also submitted second-round bids Monday, according to a report by Wall Street Journal.

Warner Discovery has requested another round of offers by Thursday and aims to finish the auction by the end of the month, the report said. 

Bidders And Revised Offers

Paramount, led by David Ellison, wants to buy the entire company, including CNN, TNT and TBS. Netflix and Comcast are bidding for the studios, libraries and HBO Max. Paramount apparently said in its letter that only its proposal avoids antitrust concerns and argued a Netflix deal would “entrench and extend” Netflix’s dominance. 

All three suitors submitted improved offers Monday and Netflix’s bid is reportedly the highest and mostly cash. Paramount raised its bid and boosted its breakup fee to $5 billion from $2.1 billion, WSJ noted.

Paramount reportedly escalated pressure Wednesday with a letter to CEO David Zaslav accusing Warner of favoring a single bidder, believed to be Netflix, and compromising the fairness of the sale process. Warner replied Thursday that it “attends to its fiduciary obligations with the utmost care.” 

Internal Plans And Regulatory Arguments

Warner is also reportedly preparing to split into separate studio-streaming and cable-network companies, and executives including Zaslav have privately suggested they prefer Netflix’s offer. Paramount alleged Warner executive Gerhard Zeiler signaled concerns about a Paramount deal to a European Commission official, though it apparently focused on Warner’s Polish news channel and not the potential merging entities.

Netflix’s bid has drawn concern from some U.S. lawmakers that acquiring HBO Max could give it too much power, though the Justice Department hasn’t reviewed the deal. Netflix argued that the market includes free platforms like YouTube. Facebook, and TikTok and said bundling HBO Max could lower costs, noting more than 75% of HBO Max subscribers also pay for Netflix.

Paramount Draws Bullish Mood On Stocktwits

On Stocktwits, retail sentiment for Warner Bros. and Comcast was ‘neutral’ amid ‘high’ message volume, while sentiment for Paramount and Netflix was ‘bullish’ with similarly ‘high’ activity.

So far this year, Warner Bros. is up 130%, Paramount is up 43%, Netflix is up 16%, and Comcast is down 25%.

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

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