Paramount May Take Warner Bros. Fight Straight To Shareholders After Netflix Snaps Up Studio In $72B Deal: Report

• Paramount said its $30-per-share cash offer was not fully considered and argued Netflix’s bid carries higher regulatory risk, CNBC reported.
• Analysts downgraded both WBD and NFLX, citing deal uncertainty and execution risks tied to the transaction.
• Senator Elizabeth Warren criticized the proposed merger, calling it an “anti-monopoly nightmare” and urging strict antitrust scrutiny.

Paramount (PSKY) is reportedly weighing taking an offer directly to Warner Bros. Discovery (WBD) shareholders after losing out to Netflix (NFLX) in a bidding process that ended Friday with Netflix agreeing to acquire HBO Max and the Warner Bros. film studio for $27.75 per share, valuing the deal at $72 billion.

Paramount’s lawyers apparently told WBD this week that the sale process favored Netflix, according to a report by CNBC.

The company had submitted a $30-per-share, all-cash offer and was the only bidder seeking all of WBD’s assets, including the studio, streaming service, and TV networks. Paramount has also argued that Netflix’s bid carries steeper regulatory risk, the report said. 

How The Sale Process Was Set in Motion

The competitive bidding began in September when Paramount CEO David Ellison wrote to WBD’s board proposing a merger and later followed with higher-priced offers. That outreach prompted WBD to launch a formal process that brought in additional bidders, including Comcast, and significantly increased market interest in the company.

WBD Restructuring Plans

Under the agreement announced Friday, WBD will separate its pay-TV networks, including CNN and TNT Sports, before the deal closes. Netflix co-CEO Ted Sarandos said the decision to reorganize assets helped clarify the timing and structure of its offer.

Paramount’s Disputes

Paramount has alleged that WBD did not adequately consider its offer. Netflix’s initial bid of $27 per share reportedly shifted the discussions. Paramount valued WBD’s Discovery Global networks at nearly $2 per share, while WBD’s business could exceed $3 per share if market performance is strong, the report said.

The company also pointed to structural advantages of acquiring the entire business and tied a $5 billion regulatory breakup fee to its proposal. Netflix’s agreement includes a $5.8 billion fee. Paramount is now looking at raising its bid and going directly to WBD shareholders, which would give Netflix an opportunity to match.

Analyst Responses To The Netflix–WBD Deal

Barrington Research downgraded WBD to ‘Market Perform’ from ‘Outperform’, citing uncertainty around completing the transaction despite viewing the valuation as solid.

Meanwhile, Huber Research downgraded Netflix to ‘Underweight’ from ‘Overweight,’ calling the deal “very risky” and highlighting the $82.7 billion enterprise value and expected 12–18 month closing period as concerns for the stock.

Political Reaction

Senator Elizabeth Warren criticized the proposed combination, calling it “an anti-monopoly nightmare” that could give the merged company control of nearly half of the streaming market. She urged a transparent antitrust review, citing concerns about the current administration’s handling of merger reviews. 

“The Justice Department must enforce our nation's anti-monopoly laws fairly and transparently - not use the Warner Bros. deal review to invite influence-peddling and bribery," Warren added in a post on X.

PSKY, NFLX And WBD Trigger Heavy Retail Activity On Stocktwits

On Stocktwits, retail sentiment for PSKY, NFLX and WBD was ‘extremely bullish,’ with message volume at ‘extremely high’ levels across all three tickers.

So far this year, PSKY is up 31%, WBD is up 146%, while NFLX is down 12%.

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

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