NEW YORK

The acquisition race in the media and entertainment sector is heating up with Paramount’s bid for Warner Bros. Discovery after the latter had already made a deal with Netflix.

WarnerMedia, owned by telecommunications firm AT&T, merged with Discovery in 2022, and since then, it has continued operating as Warner Bros. Discovery. But rising competition, debt burden, and value losses led the firm to restructure in June.

The firm said it planned to separate its studio and broadcasting operations from its global television networks to create two strong media companies, with the separation expected to be completed in mid-2026.

But Warner Bros. Discovery is also reviewing its option to sell the firm, as per a statement in October.

It said it was continuing with its plan to split into Warner Bros. and Discovery Global but it received offers for the entire company and for Warner Bros. alone.

Media companies like Netflix, Paramount and Comcast submitted bids to acquire Warner Bros. Discovery.

The Saudi Arabian Public Investment Fund (PIF) reportedly made large-scale investments in the global entertainment industry in recent years, and it also entered the race to acquire the firm.

Netflix announced last week that it reached an agreement with Warner Bros. Discovery to acquire Warner Bros., including its film and television studios, HBO Max streaming platform, and HBO, in a deal worth $72 billion in equity value and $82.7 billion in total company value.

Netflix will be paying cash and stock, around $27.75 per share. The acquisition is expected to be completed in the third quarter of 2026.

Netflix executives are confident they will be able to finalize the deal and receive regulatory approvals.

Paramount, on the other hand, recently submitted a new counteroffer for Warner Bros. Discovery.

The platform made its offer to shareholders, saying it was strategically and financially more beneficial than Netflix’s offer.

Paramount offered to buy all Warner Bros. Discovery shares for $30 in cash per share, totaling $108.4 billion enterprise value. The offer covers the entirety of the company, including its Global Networks segment, and provides shareholders with $18 billion more in cash than Netflix’s offer.

Paramount is also confident its offer will be approved, albeit more quickly due to its pro-competitive nature.

Paramount’s financial partners in its bid include PIF, Abu Dhabi’s L’imad Holding, the Qatar Investment Authority (QIA), and Affinity Partners -- the firm owned by US President Donald Trump’s son-in-law, Jared Kushner.

Comcast co-CEO Mike Cavanagh said his company’s bid for Warner Bros. Discovery was lacking in cash compared to Netflix and Paramount’s bids.

Monopoly concerns

Trump said Netflix’s deal for Warner Bros. has to go through due process, as the former’s market share is large and its share would expand if it acquired Warner Bros., saying he will be involved in the decision.

But antitrust concerns came to the fore after Netflix and Warner Bros. reached an agreement. The sale was criticized due to the fact that it would increase Netflix’s market share to more than 30%, risking creating a monopoly.

Objections to the agreement came from Republicans and Democrats in Congress.

Republican Sen. Mike Lee opposed the deal, while Rep. Darrell Issa sent a letter to the Justice Department and the Federal Trade Commission (FTC).

Democratic Sen. Elizabeth Warren called the deal “an anti-monopoly nightmare,” demanding a review.

Media industry groups like Cinema United, the Writers Guild of America, and the Independent Cinema Alliance demanded the deal be blocked due to competition concerns, falling employment and wages, worsening conditions for media workers, higher prices for consumers and the effect on independent movie theaters.

Regulatory approvals pending

Netflix needs to have international approval, in addition to the US and the EU, for the deal to go through.

The deal has come under fire as it would significantly increase Netflix’s market share.

Other conditions, like approvals from Warner Bros. Discovery shareholders and the completion of financing, need to be met for the deal to close.

Paramount’s offer will remain open for 20 business days and it may be extended, while Warner Bros. Discovery will have 10 business days to respond to the offer.

In withdrawal, Warner Bros. Discovery will have to pay Netflix a $2.8 billion termination fee.

In failure to close the deal due to insufficient approvals, Netflix will have to pay Warner Bros. Discovery $5.8 billion in compensation.