The acquisition race for Warner Bros. Discovery, owner of HBO and CNN, has intensified as Paramount Skydance increases its proposed breakup fee to $5 billion. This fee, more than double the previous offer of $2.1 billion, is part of Paramount’s improved bid to outmaneuver rival offers from Netflix and Comcast, according to insiders familiar with the situation.
This breakup fee would be paid to Warner Bros. Discovery if an agreement is reached but the deal ultimately fails to close. Paramount’s move reflects its confidence in navigating regulatory approval for the proposed merger, sources said, while emphasizing that the company is determined to secure the acquisition.
Competing Offers for Warner Bros. Discovery
Warner Bros. Discovery is currently evaluating acquisition proposals from three media giants: Paramount, Netflix, and Comcast. The decision is expected to be finalized within the next two weeks, following a second round of offers submitted earlier this week. Discussions are ongoing with all interested parties.
Paramount, owner of CBS and MTV networks, initiated the process by submitting several unsolicited bids to acquire Warner Bros., prompting the company to formally open the door to acquisition offers in October. Paramount has submitted five bids in total thus far, seeking complete ownership of Warner Bros. Discovery. In contrast, Netflix and Comcast have proposed deals that would separate Warner Bros.’ cable networks into a separate transaction.
Paramount argues that splitting the cable networks from Warner Bros.’ main business would be a taxable event, making its all-encompassing bid more attractive to Warner Bros.’ board of directors.
Paramount’s Unique Position
Despite being the smallest contender among the three bidders, Paramount enjoys a closer relationship with the current U.S. administration, which has taken a more interventionist stance in regulating the media industry. Since its merger with Skydance Media in August, Paramount has been under the control of the family of Oracle chairman Larry Ellison. Larry’s son, David Ellison, serves as Paramount’s CEO and is known for his strong ties to former U.S. President Donald Trump, who has publicly praised both Larry and David.
David Ellison highlighted his positive working relationship with the Trump administration during the Bloomberg Screen Time conference in October, further bolstering Paramount’s position in the regulatory scrutiny process. Any merger with Warner Bros. Discovery would require approval from the U.S. Department of Justice.
Netflix and Comcast: Stronger Financial Standing
While Paramount has been aggressive in its pursuit, Netflix and Comcast present formidable competition. Netflix, with the highest market capitalization among the bidders, has reportedly submitted a higher offer than Paramount’s latest bid. Comcast, the largest in terms of sales, also poses a significant challenge. However, both Netflix and Comcast face regulatory concerns, including accusations of potential monopolistic behavior that could lead to job losses in Hollywood.
Regulatory and Political Concerns
The proposed acquisition bids have drawn scrutiny from U.S. lawmakers and regulators. Republican Congressman Darrell Issa raised antitrust concerns regarding Netflix’s bid, citing fears of excessive concentration in the streaming industry. Similarly, the White House has expressed reservations about Netflix’s proposal, as reported by the New York Post. Netflix is reportedly lobbying Warner Bros. Discovery’s board and U.S. politicians to gain support for its bid.
Meanwhile, Warner Bros. Discovery’s board has set a target price of $30 per share, valuing the company at $75 billion, excluding debt. Although exact details of the bids remain undisclosed, insiders suggest that Netflix’s offer exceeds Paramount’s.
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