Warner Bros Discovery has urged its shareholders to reject Paramount Skydance’s $108.4 billion (£80.75bn) takeover bid, choosing instead to move forward with a $72 billion deal with Netflix for its film and streaming businesses. This decision marks a dramatic twist in the high-stakes battle for one of Hollywood’s most iconic studios.

The announcement highlights the shifting dynamics of the entertainment industry, as streaming giants increasingly dominate traditional studios and content ownership.

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Netflix Deal Favored Over Paramount Bid

Paramount had claimed its $108.4bn offer was “superior” to Netflix’s bid. However, Warner Bros Discovery’s board concluded that the Netflix deal offers better long-term value for shareholders, citing lower regulatory risk and a clearer financing structure. The board issued a legal filing rejecting Paramount’s offer, also dismissing the idea that the billionaire Ellison family, who back Paramount, would fully support the transaction.

Netflix co-CEO Ted Sarandos welcomed the board’s recommendation, calling the merger agreement “superior” and “in the best interest of stockholders.” Netflix’s offer would allow the streaming giant to acquire Warner Bros’ movie studio and HBO streaming service, securing access to a rich content library while excluding Warner Bros’ pay-TV networks such as CNN and TNT.

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Paramount’s All-In Approach

Paramount, in contrast, seeks to acquire Warner Bros in its entirety, including television networks that compete with its own channels like CBS, MTV, and Showtime. Analysts warn that such a merger could face scrutiny from regulators in the US and Europe over potential consumer choice erosion and market consolidation in the entertainment sector.

While Warner Bros’ board favors Netflix’s offer, Paramount could return with a revised bid, keeping the Hollywood takeover saga alive.

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Industry Implications

A new Warner Bros owner would gain a major advantage in the highly competitive streaming market, with access to franchises including Harry Potter, MonsterVerse, Friends, and the HBO Max library.

Industry experts expect the battle to continue for months. Mike Proulx from research firm Forrester commented: “What’s unfolding now feels like a real-life, far more consequential episode of HBO’s Succession. And if you think you know how this plot ends, think again.”

Some in the film industry have voiced concerns over the merger. The Writers Guild of America (East and West branches) urged regulators to block any consolidation, warning that it could result in job cuts, lower wages, and reduced content availability for audiences.

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Key Takeaways

1. Warner Bros Discovery’s board unanimously recommends Netflix over Paramount.
2. Netflix acquires Warner Bros’ film studio and HBO streaming service but not its TV channels.
3. Paramount’s all-in bid could face antitrust scrutiny due to media consolidation concerns.
4. The deal gives Netflix access to top franchises and content libraries, strengthening its streaming dominance.
5. The Hollywood takeover saga is likely to continue for several months.