“Netflix to acquire Warner Bros Discovery” was certainly not a headline that most industry observers expected to see this year, not with President Trump’s affiliation with “traditional” media. Late last week, the streamer announced it had won the WBD war with a proposed acquisition of the company totaling an enterprise value of $82.7 billion—sending tremors through the structure of the global media industry as it stands.
But tensions continue to rise after Paramount Skydance launched a hostile tender offer for WBD for $108.4 billion just three days after Netflix reached an agreement. WBD will now pass this offer to stockholders by the end of next week after careful legal and financial consideration.
For Paramount Skydance, all’s fair in love and war. By directly appealing to the shareholders, the company is trying to forcibly pry WBD in its entirety from Netflix’s grip, including WBD’s global networks business Discovery Global.
The Netflix transaction as it stands is expected to close within 12 to 18 months following the planned separation of Discovery Global, which is now forecasted for Q3 2026.
Whether Netflix or Paramount Skydance emerge triumphant, regulators have little over a year to essentially stop two titans from colliding together into a black hole of monopolization that threatens to swallow smaller competitors from the industry.
Netflix claims that acquiring WBD’s studio and streaming assets, including HBO and HBO Max, will ultimately strengthen the entertainment industry through consolidation, with consumers to contend on the whole with a less fragmented streaming landscape.
Paramount’s converse argument is that its all-cash offer is sweetening the pot by accelerating the acquisition through regulatory approval much faster than if Netflix were behind the wheel.
Politically, consolidating (and controlling) CBS and CNN under one roof would likely act against Paramount’s case in the eyes of regulators, especially considering that the company —whose bid is reportedly being backed by funds from three Arab states—would be handing these news outlets into overseas hands.
Yet, Paramount chairman David Ellison has kept the support of US President Donald Trump throughout the bidding process, with further consolidation of the media landscape set to strengthen the President’s political control.
WBD’s initial choice of Netflix makes it clear that it wants to avoid this outcome. While a Paramount acquisition makes more sense on paper—with two legacy giants folding into one another—the challenge for WBD is to continue to convince its shareholders that spinning out Discovery Global will result in greater cost synergies in the long run.
The question now to ask is: does Netflix really want WBD, or does it just want to stop others from getting it?
Besides driving the bids up for competitors simply by entering the race itself, Netflix will want to win WBD to prop up its plateauing engagement growth, which has been no secret since the platform ceased reporting subscriber numbers earlier this year.
Netflix has repeatedly dismissed claims that WBD is a leg to stand on. Instead, the company has grounded its appeal to shareholder pockets through promises of higher revenue opportunities and cost synergies, with the streaming service expecting WBD to generate roughly $3 billion in EBITDA in 2026.
Whether the company can continue its “organic” 16% year-on-year growth after shelling out $82.7 billion on WBD—including its legacy infrastructure, debt, and theatrical distribution issues—remains to be determined.
So, how and where Netflix can cut costs is now crucial in propping up the company’s long-term finances. By the third year after the deal closes, Netflix expects at least $2 billion to $3 billion in cost savings, which will come from mostly overhead expenses, as well as “overlapping tech stacking capabilities”, as Spencer Adam Neumann, Netflix’s Chief Financial Officer, stated on a conference call to financial analysts last Friday.
Faultline has penned a separate piece this week laying out what Netflix and WBD each bring to the table from their respective tech stacks.
Netflix will also generate synergies through no longer having to license WBD content on its platform. However, these savings will likely be translated into increased subscription prices for Netflix and HBO Max subscribers, particularly if HBO Max becomes a premium service under the Netflix umbrella – which Paramount claims will be avoided with the power in its hands.
If HBO Max drives up subscription prices as a premium, neither Netflix nor Paramount Skydance can avoid a mass exodus in churn rates.
For the time being, Netflix has reassured that it will continue to operate both HBO and HBO Max as normal. The company has, however, repeatedly alluded to its plans to “repackage” HBO Max and its IP, with the omitted details likely gatekept behind an NDA.
Bundling HBO Max content into Netflix would certainly fortify the latter’s content library with the franchise-depth it outbid Comcast and Paramount Skydance for – with increased engagement, subscriber numbers, and ad revenue to follow suit.
Netflix will also want to cut operational costs by swallowing HBO Max whole and making it a “tile” in its own library, much like the Disney+’s Duo plan with Hulu for $10.99 monthly with ads and $19.99 monthly ad-free in the US.
An all-in-one bundle to this effect will give Netflix a pricing power subject to intense regulatory scrutiny. Moreover, Netflix will have to face navigating HBO Max’s conflicting content licensing deals globally, especially since WBD began its push into Europe last year.
So, while Netflix will want to fully absorb HBO Max, it will remain an inevitability years in the making.
Another asset pocketed for Netflix is TNT Sports, which will equally be positioned as a premium tier in the Netflix portfolio as ESPN now is to Disney+.
Crucially, TNT Sports hands Netflix the broadcasting rights to the Premier League and Champions League soccer and international rugby matches in the UK and Ireland — all of which Netflix has aggressively fought for in its bid to break into live sports streaming.
As Faultline recently assessed, Netflix’s recent bid for English Premier League rights indicates a new era of sports streaming while signaling the final blow for traditional broadcasters and pay TV operators.
Netflix co-CEO Ted Sarandos made assurances during the conference that there would be no change to the company’s sports strategy in any way. However, Netflix as a TNT Sports competitor is a completely different story to a TNT Sports operator.
The streamer has been able to nimbly avoid frustration over further fragmenting sports streaming, but the challenge for Netflix is now whether it can continue to operate a well-established legacy platform with a premium live streaming experience, all while treading the regulatory minefield.
In the battle for sports rights, this is another kick in Paramount’s teeth, who recently paid $1.3 billion for the Champions League distribution rights in the UK from 2027.
Meanwhile, concerns have sparked over Netflix’s intentions with WBD’s current cinematic contracts which are set to run until 2029.
For Netflix, long exclusive windows for theatrical releases are no longer “consumer-friendly” and will likely be shortened, prompting viewers to watch releases when they are later available on Netflix. By reducing both the number of releases as well as their theatrical run, annual box office ticket sales will take an immense hit, with smaller independent theaters set to suffer the most.
So after promising to release 30 movies theatrically a year if it acquires WBD, Paramount has re-entered the race with a credible case. But as Netflix continues to tighten its grip, it is uncertain whether using the “Trump-card” will continue to work in Paramount’s favor.