Netflix is ramping up efforts to bid for Warner Bros. Discovery’s streaming service and studios, sparking concern among competitors about the viability of its strategy, as reported by On The Money.
According to insiders, Netflix CEO Ted Sarandos has been active in lobbying to calm antitrust worries. These concerns are not only raised by the Trump administration but also by members of Warner Bros. Discovery’s board. His actions appear to be diminishing Paramount Skydance’s advantageous position in the bidding process.
As the bidding war progresses, Netflix has solidified its status as a key player. Warner Bros. Discovery plans to initiate a new round of bids soon, allowing bidders to either enhance their offers or opt out.
Paramount Skydance, led by Trump supporters David and Larry Ellison, has previously offered approximately $25 per share, totaling around $60 billion for all of WBD, which encompasses Warner Bros. Studios, HBO Max, and other cable entities like CNN.
Alongside God Comcast, both Netflix and Comcast have expressed interest in acquiring WBD Studios and its streaming services. Historically, Netflix has been cautious about big acquisitions, appearing somewhat of a dark horse in this scenario due to complex antitrust considerations.
However, sources indicate that Netflix’s proactive approach is prompting discussions about whether the antitrust implications of a Paramount Skydance bid hold meaning, not just for WBD but also within the Justice Department’s antitrust team.
Legal representatives for Netflix seem to be making inroads with the WBD board, arguing what they refer to as “category ambiguity.” Their stance is that antitrust laws may not apply straightforwardly to streaming due to the vast amount of content available on platforms like YouTube and social media, making it hard to define or regulate effectively.
This insight suggests that typical antitrust issues may not be as concerning when considering a merge between Netflix, the leading streaming service, and HBO Max, which ranks third under WBD.
Yet, WBD’s board is increasingly wary that Netflix could run into significant antitrust challenges if it tries to acquire only HBO Max and WBD’s studios, echoing arguments from Paramount Skydance’s legal advisors. Meanwhile, discussions are underway within the Justice Department about potential antitrust challenges regarding a partnership between Paramount Skydance and Warner Bros.
One legal expert involved in the bidding remarked, “Selling to Warner’s board is completely out of the question from an antitrust perspective, but it’s working.” They noted that the competition is shaping into a two-horse race primarily featuring Paramount Skydance and Netflix.
No immediate comments were made by representatives from Netflix or WBD on the evolving situation.
In the broader context, former President Trump supports the Ellisons’ acquisition efforts for multiple reasons, including countering CNN’s commentary, which he perceives as unfavorable. He has publicly expressed a desire to facilitate their acquisition, possibly to unite two major studios.
For WBD, Netflix’s appeal lies in its intent to acquire a studio and a streaming service rather than a broader swath of assets, particularly as WBD aims to restructure into two separate entities. Zaslav’s approach seems designed to maximize value for streaming and studios, particularly against the backdrop of lower valuations for traditional cable assets.
Still, questions linger about whether “category blurring” truly pertains to streaming. Legal representatives for Paramount Skydance have cautioned the WBD board that the Trump administration might block any merger between two significant streaming services and a major studio. This concern poses challenges for Netflix’s business model focused on streaming.
Additionally, Netflix faces investor skepticism, with its stock recently dipping nearly 10% over the past month since news of its interest in bidding for WBD emerged.
