This article first appeared on GuruFocus.
Netflix (NASDAQ:NFLX) has surged into pole position in Hollywood’s most-watched auction, submitting the highest bid so far for Warner Bros. Discovery’s studio and HBO Max streaming assets at around $28 per share, according to people close to the secretive process. Paramount (PARA) countered with a fresh offer near $27 per share, but its strategy has differed because Paramount has been trying to buy the entire Warner Bros. Discovery (NASDAQ:WBD) portfolio, including CNN and other cable channels, rather than just the studio and streaming business. The pace has accelerated sharply in recent days, and late Thursday, Bloomberg reported that WBD and Netflix have entered exclusive talks, signaling that competitive pressure is now shifting toward the finish line after analysts predicted a bidding war once iconic Hollywood assets were put up for sale.
Paramount is pushing back aggressively, arguing through its attorneys that the auction may have been designed to tilt toward a single preferred bidder, raising concerns about a process perceived as narrow. The timing is meaningful because WBD has been under market pressure since its stock fell from roughly $25 to a low of $7.52 after the 2022 merger, leading CEO David Zaslav to announce plans to split the business into two publicly traded entities. If the split eventually materializes, one half would retain HBO Max and the movie studio, while the other half would center around CNN and cable properties. Paramount has possibly attempted to get ahead of this outcome by making unsolicited bids for the entire company, even though its market cap is currently one-fourth the size of WBD. Investors are watching closely because the split plan and the new bidding interest helped rejuvenate WBD’s shares back toward $25 earlier this year.
The regulatory gauntlet could be just as consequential as the bidding itself. Paramount executives have repeatedly argued that their proposal is more likely to pass under the Trump administration, thanks to David Ellison’s close ties with the White House, advisers, and key Republican lawmakers. Critics, however, point out that any deal could be reviewed for months or even longer across multiple jurisdictions, not just Washington, but also the UK, EU, and Latin America. Analysts say Netflix may be willing to handle a legal confrontation if needed, similar to past media cases that required courtroom battles. Political voices are already weighing in: Sen. Mike Lee warned that a NetflixWBD combination may raise antitrust questions, while Bank of America analysts suggested that if Netflix secured Warner Bros. assets, the streaming wars could be effectively over, potentially placing Netflix in the most dominant competitive position in global entertainment.
Credit: Source link