Commercial Awareness Digest - 12th December 2025

Warner Bros Discovery: Competing Acquisition Bids

By Zuha Malik

An acquisition is a transaction in which one company purchases a controlling stake in another, allowing it to direct how the business is run. In capital-intensive sectors such as media and technology, acquisitions are often favoured over organic growth because they offer a faster route to scale, as well as intellectual property and market access. Transactions may be agreed with a target’s board in a friendly deal or pursued on a hostile basis, where a bidder appeals directly to shareholders, who own shares in the company and ultimately have the power to approve or reject a sale.

Why Warner Bros Discovery Has Become a Target

This dynamic is currently playing out in the global entertainment industry, where Warner Bros Discovery has become the focus of competing acquisition strategies. The group combines some of the most valuable content assets in the industry - including Warner Bros Pictures, DC Studios and HBO - with the Max streaming platform, while also operating a large portfolio of traditional cable television channels. Although its studios and streaming operations offer long-term growth potential, revenues from cable television have been declining as audiences shift away from scheduled broadcasting. Combined with a substantial debt burden inherited from its earlier merger, this has placed pressure on the company to separate and monetise its highest-value growth assets.

Netflix’s Targeted Bid

Netflix’s proposed acquisition is designed to do exactly that. Rather than acquiring Warner Bros Discovery in its entirety, Netflix has agreed to purchase the film and television studios together with the Max streaming platform, while excluding most legacy cable channels, which are to be carved out into a separate business. Valued at approximately $72-83 billion depending on the treatment of debt, the transaction is funded through a mix of cash and Netflix shares, allowing Warner Bros Discovery shareholders to retain an economic interest in the combined streaming business.

From a strategic perspective, the deal represents a shift in Netflix’s operating model. Although Netflix is the world’s largest streaming platform, it remains heavily exposed to rising content costs and competition for exclusive licensing rights. Acquiring Warner Bros’ studios would allow Netflix to vertically integrate the entire content chain - from commissioning and production through to global distribution on its own platform. This would give Netflix greater control over release schedules, marketing and the long-term exploitation of major franchises such as DC and Harry Potter, while reducing its reliance on short-term licensing negotiations.

Paramount’s Hostile Counterbid

Shortly after Netflix’s agreement was announced, Paramount launched a rival hostile bid valued at approximately $108 billion, seeking to acquire Warner Bros Discovery in its entirety. Because the Warner Bros Discovery board had already approved Netflix’s offer, Paramount chose to proceed directly to shareholders, offering a higher headline price in an all-cash transaction. This structure allows Paramount to emphasise certainty and liquidity: shareholders would receive a fixed cash payment rather than Netflix shares whose value would fluctuate with market conditions and future performance.

Paramount’s bid also reflects a fundamentally different strategic logic, focused on consolidation. Unlike Netflix’s targeted acquisition of studios and streaming assets, Paramount’s proposal encompasses the full Warner Bros Discovery group, including its legacy cable networks. By integrating studios, streaming and broadcast channels within a single corporate structure, Paramount aims to generate cost efficiencies and use shared infrastructure to manage declining television revenues, rather than exiting those businesses altogether. Proceeding on a hostile basis enables Paramount to bypass management’s preference for a selective sale and instead frame the decision as a straightforward choice between immediate cash value and longer-term strategic participation.

Advisers on the Competing Bids

The competing bids are also being advised by some of the most prominent US corporate law firms. Netflix is being advised by Skadden, Arps, Slate, Meagher & Flom on its acquisition of Warner Bros Discovery’s film, television and streaming assets, while Warner Bros Discovery is advised by Wachtell, Lipton, Rosen & Katz and Debevoise & Plimpton in connection with the negotiated transaction. By contrast, Paramount’s hostile bid for the entire Warner Bros Discovery group is being advised by Cravath, Swaine & Moore and Latham & Watkins, reflecting its decision to pursue the offer directly to shareholders rather than through the company’s board.

Is the Netflix-Warner Bros Discovery merger likely to raise antitrust concerns?

By Esme Glover

The streaming industry has encountered a new period of uncertainty following Paramount’s surprise hostile $108 billion bid for Warner Bros Discovery (WBD), overtaking Netflix's earlier bid. Beyond the technicalities in the M&A space, the prospect of a Netflix-WBD merger has raised broader questions regarding market power, consumer harm and whether such a merger will trigger U.S. antitrust concerns.

A hostile bid takeover is an alternative approach taken by bidders after a merger deal has been signed. Ultimately, bidders will bypass company leadership to appeal to shareholders directly. Last week, Paramount, led by chief executive David Ellison, trumped Netflix’s bid for WBD. They also raised questions about competition in the streaming space, setting the scene for potential complex regulatory debates.

Together, Netflix and WBD maintain 31% of global streaming subscriptions and account for 35% of viewing hours. Whilst on paper this might appear to be a clear breach of antitrust regulation, due to the large market share of the two companies, the Financial Times’ opinion writer John Foley has highlighted how competition in the streaming space is more complicated than before.

Antitrust regulators hold the responsibility of ensuring that consumers will not be made worse off by M&A deals. Unlike industries where physical constraints can create local monopolies, streaming subscribers face fewer costs due to the abundance of alternatives on offer. These include Amazon Prime Video, Disney+ and Paramount+. The ease with which consumers can switch between streaming companies, without having to spend significantly more money, weakens the argument that a Netflix-WBD merger will exploit market power.

Due to the highly subjective nature of analysing the regulatory landscape of streaming services, lawyers face the challenge of how to assess the problem. Foley has discussed that customers have the option to choose between a variety of streaming companies and thus argues that the Netflix-WBD merger is not necessarily impeding on their options. Furthermore, Foley underscores the need for analysis of quality rather than purely judging off market share. He posits the idea that antitrust lawyers might assess companies' expenditure on their content as a means of judging its quality.

The potential merger highlights the growing difficulty of applying traditional antitrust tools to creative markets. For lawyers, the potential Netflix-WBD merger poses a significant challenge, signalling increasing uncertainty in market definition, the likelihood of more complex future regulatory reviews for major media and tech transactions, and the shift towards more subjective factors in analysis of competition. The Netflix-WBD merger might hold critical value as a reference point for future legal challenges.