Gaming out Paramount Skydance’s (PSKY) hostile takeover of Warner Bros. and Netflix’s (NFLX) struggle to stay in play has the outlines of an HBO drama.
“Succession” dealt with similar plotlines. And the prospects of last-minute financing and flamboyant brinksmanship bring a touch of “Industry.”
The corporate battle unfolding, which is also its own kind of consumable media content, is self-referential and meta. But the political maneuvering and theatrics of it all aren’t just fun details. They’re the key to who wins.
An important tension in the ongoing contest is the different audiences that Paramount and Netflix are targeting to ultimately win approval.
In a strict sense, Netflix had to convince WBD to sell, and it did. Whereas Paramount, despite multiple offers, never saw a handshake. Now the mission of persuasion is more diffuse and enigmatic.
Paramount needs to go directly to shareholders to convince them to accept its all-cash $108.4 billion tender offer.
Netflix, on the other hand, in an unofficial but nonetheless meaningful way, needs to convince President Trump and his constellation of allies.
Multiple outlets have reported that Netflix has already done that too, or at least made the case that he shouldn’t outright condemn the Netflix deal. Co-CEO Ted Sarandos met with Trump last month, Bloomberg first reported, and Trump said WBD should sell to the highest bidder.
Before Monday, that was Netflix. But now Paramount’s overall package is larger still, in raw numbers. And that brings us to the next point of contention: How much are WBD’s component assets worth?
Netflix’s $72 billion offer, or roughly $27.75 per share, is for WBD’s movie studio and streaming business. Paramount’s takeover bid is $30 per share, but that is for all of WBD’s assets, including its cable networks. So it’s not a true apples-to-apples comparison. And this is where it gets complicated.
Warner Bros. had designs to spin off its cable networks — CNN, TNT, and the Discovery Channel — before the planned merger. So how investors and analysts value the spin-off would actually determine whose offer was larger.
If people value WBD’s cable channels at roughly $3 or more for every Warner Bros. share, as some analysts do, then Netflix’s bid would remain the top offer.
Alternatively, if others assess a smaller spin-off value, then Paramount would win out.
But corporate finance is only one element of this mega media drama. Stakeholders from across the worlds of entertainment and politics have gripes with both potential owners of WBD.
The Ellisons of Paramount, a politically connected family that has just subsumed CBS, could soon control another mainstream news outlet in CNN — wielding two major Hollywood studios and two cable companies.
The horizontal mergers could trigger antitrust scrutiny and have already sparked social pushback around the concentration of so much American media under one government-aligned roof.
Netflix is drawing criticism for different reasons. Here is a tech giant largely seen as hostile to the moviegoing experience on the verge of becoming even more powerful, commanding more streaming market share and a legacy movie studio. Opponents of Netflix winning out see the threat of a peerless conglomerate squeezing Hollywood’s creatives, cinema operators, and subscribers.
And uniting the biggest and third-biggest streamers has been an easy monopoly argument for many.
For all the claims of synergy that such monster mergers espouse, both deals have the prospect of diminishing the US media landscape. Fewer choices, more consolidation. And improbably, it will be hard to look away.