The struggle for dominance over Warner Bros. Discovery has now shifted to Europe, as Paramount Skydance and Netflix ramp up their lobbying efforts with regulators who view this as a significant obstacle in finalizing the acquisition, according to reports from On the Money.
Amid some public disputes over which deal between Paramount and Netflix holds more weight, recent developments indicate that the situation has moved beyond the U.S. Now, both the European Union and the UK must also give their green lights for the company, informants indicate.
The main takeaway? Sure, cash is crucial, but it doesn’t matter if you can’t secure regulatory approval. Paramount Skydance appears to have a slightly easier path here. I mean, I haven’t heard from anyone in finance or law who believes Netflix, which is looking to merge its top streaming service with HBO Max, will breeze through a $72 billion deal. Industry insiders suggest that Paramount’s offer is notably more economical than the proposed $78 billion merger between the two studios.
A source close to Paramount suggested that there’s a belief they don’t need to increase their bid at this time. “It’s a pivotal moment concerning the regulators, and they feel they have an advantage,” the source noted.
Meanwhile, representatives from PSKY, led by Jerry Cardinale of Redbird Capital, are currently in London after a recent trip to Washington. Reports indicate they’re emphasizing to UK authorities that the Netflix proposal could lead to antitrust problems, a claim they are also making in the EU.
On the flip side, Netflix isn’t sitting idle; they’re also engaging with UK and EU regulators this week as part of their strategy. They seem to be making similar arguments as they did in Washington, which, well, points to a competitive landscape where viewers are turning to platforms like YouTube and social media for their content.
According to Capitol Forum, skepticism is notably high regarding the Netflix deal in the UK. “Baroness Twycross, representing the UK Government’s Department for Culture, Media and Sport, has confirmed that the Competition and Markets Authority will scrutinize the Netflix agreement,” the publication has reported.
Despite some American dismissal of British nobility, figures like Baroness Twycross could have a significant impact on the future of this deal. The approval of these authorities will be vital given the intricate global operations of both bidders.
In the midst of this, a senior official from the Trump administration expressed caution about Netflix’s market power. Authorities, including the antitrust division of the Justice Department, might closely examine not only this deal but also Netflix’s overall business practices, akin to what happened with Amazon and Google, sources inform On the Money.
This increasing scrutiny perhaps explains the steep decline in Netflix’s stock, which has plummeted by over $160 billion in market value just in the past half-year, pushing CEO Ted Sarandos to rethink the equity component of their offer to maintain share prices at around $27.75.
Let’s not forget that President Trump indicated his involvement in regulatory matters. He has longstanding ties with tech billionaire Larry Ellison, who is financing Paramount Skydance’s bid, and recently had a friendly meeting with Sarandos, courtesy of a Republican lobbyist hired by Netflix.
Interestingly, Trump just shared an opinion piece on Truth Social criticizing Netflix’s perceived progressive bias, pushing for a halt to what he calls the company’s “cultural takeover.”
All of this suggests that after their time in London, both companies will likely regroup for another round of discussions back in the U.S., according to sources.
