Inside Netflix’s $5 Billion Power Play to Block a Warner Bros.-Paramount Deal
Netflix just crashed the Warner Bros. bidding war with a surprise bid that could upend the race, Deadline reports. The streamer’s move sharply raises the stakes and puts fresh pressure on Hollywood’s storied studio.
Well, that escalated fast. Netflix just threw a giant wrench into the Warner Bros. bidding battle, and it is not subtle: a massive fee meant to keep everyone else at arm's length while they try to close.
What Netflix is dangling in front of WBD
According to multiple reports, Netflix has put a mostly cash offer on the table for Warner Bros. Discovery at about $28 a share. On top of that, they added a $5 billion breakup fee meant to make it very, very painful for Warner Bros. to walk away once they engage.
Here is where the deal-making jargon gets messy. The reports call it a breakup fee, which usually means the seller (WBD) pays the buyer (Netflix) if the seller bails. But the way it is being talked about sounds more like a reverse termination fee (the buyer pays the seller if the deal falls apart for specific reasons, like regulatory issues). Either way, the point is the same: Netflix wants to lock this up and scare off rivals.
What Netflix actually wants
Netflix is not trying to swallow the whole company. The target here is Warner Bros. Studios and the HBO streaming business. If it lands, Netflix would be sitting on a mountain of WB IP, with the HBO service folded into its ecosystem. That last part is exactly what has competitors freaking out.
The rivals are not happy
Comcast is in the hunt, and so is Paramount Skydance Corp., which has been pressing hard and, by some accounts, was close to a deal with WBD before Netflix showed up with the cash cannon.
Paramount Skydance sent a letter to WBD arguing that rival bids from Netflix and Comcast face major regulatory problems, especially if Netflix tries to bolt HBO's streaming service onto its platform. They are also calling the sale process unfair and say there are conflicts inside WBD's leadership.
"Present serious issues that no regulator will be able to ignore."
WBD's response? The board says it is handling its fiduciary duties with the utmost care and is fully complying with them. Translation: we are following the rules, back off.
Where the auction stands
This is all coming out of the second round of bidding for Warner Bros., and Netflix was reportedly the first to pitch an all-cash deal. If you are keeping score:
- Netflix: roughly $28 a share, mostly cash, plus a $5 billion breakup-type fee to keep WBD from straying
- Targets: Warner Bros. Studios and the HBO streaming service
- Rivals: Comcast and Paramount Skydance Corp., both still in the mix
- Regulatory heat: Paramount Skydance says Netflix and Comcast bids raise antitrust red flags
The leadership subplot
Because there is always a power-seat angle: if WBD had gone with Paramount Skydance, CEO David Zaslav would reportedly be in a safer spot. That offer was said to include Zaslav taking the CEO job post-deal. There was also a plan floating around to rename a television company tied to WBD CFO Gunnar Wiedenfels to Discovery Global. With Netflix, none of that is set. Lots of cash on the table, but Zaslav's future is very much TBD.
What this could mean if Netflix wins
If Netflix actually pulls this off, it gains a historic studio, a deep IP library, and the HBO streaming business. That is a strategic earthquake and exactly why competitors are already shouting about antitrust. The $5 billion fee is the tell: Netflix knows regulators will have questions, and they are trying to make it worth WBD's while to hold the line.