Depending on who you ask, Netflix‘s acquisition of Warner Bros. Discovery is either the death of Hollywood (if you’re a writer, director or anyone who actually works in Hollywood) or a golden opportunity (if you happen to be a Netflix stockholder). But the streaming giant’s plans might be torpedoed by a surprise move from a rival studio. Per The Hollywood Reporter, Paramount is making a hostile bid for Warner Bros.’s stock options.
Paramount chief David Ellison didn’t mince words when talking about the reasons for the hostile bid, saying that Netflix “made an inferior offer” for Warner Bros. “WBD shareholders deserve an opportunity to consider our superior all-cash offer for their shares in the entire company,” he said. “Our public offer, which is on the same terms we provided to the Warner Bros. Discovery Board of Directors in private, provides superior value, and a more certain and quicker path to completion.” It turns out that Paramount might have a few cards up its sleeve that could tilt the balance in its favor, and radically reshape Netflix’s future — and Hollywood — in the process.
If Paramount Wins Warner Bros., It’ll Strike a Major Blow to Netflix’s Cultural Impact
Since its inception, Netflix has disrupted Hollywood traditions. It launched the “Streaming Wars”, sending every studio into a frenzy to produce its own streaming service and creating a bubble that popped with a mighty crash. Its CEO, Ted Sarandos, has a strange aversion to theatrical releases of its movies, despite those movies having the kind of astronomical price tag you’d expect from a big blockbuster release. Yet it’s also produced projects that are genuine pop culture landmarks, including Stranger Things, House of Cards, and BoJack Horseman. If Warner Bros. fell under the Netflix umbrella, it would arguably become one of the most significant forces in the industry.
The Paramount deal challenges that, and in the process raises the idea of an even more powerful force. While Hollywood used to be defined by a collection of studios, mega-mergers are increasing certain studios’ power. Whether it’s Disney buying 20th Century Fox or Amazon absorbing MGM, executives with deep pockets want certain studios for the ability to exploit their intellectual property. If Paramount gets Warner Bros., it’ll be one of the biggest studios in the world and overshadow Netflix. Paramount’s even struck a major blow against Netflix by signing a deal with Stranger Things creators Ross & Matt Duffer, robbing the streamer of one of its biggest creative giants.
Paramount Wants All of Warner Bros. — Not Just Its Movies
Lost in all the hubbub over the Warner Bros./Netflix/Paramount kerfuffle is the fact that Netflix would only acquire Warner Bros.’s film library if its merger went through. Paramount, on the other hand, wants Warner Bros. in its entirety. That means its movie library and TV networks, including TNT, CNN, HGTV, the Food Network and Discovery. On top of that, Paramount would also potentially acquire HBO and HBO Max, which would deal Netflix another major blow as it wouldn’t be the biggest streaming game in town.
While some studios might balk at absorbing a collection of television channels in a time when linear television is facing its biggest uphill battle, Paramount is sending a major message: “We want WB, baggage and all.” The fact that it’s willing to absorb a potential mountain of debt shows how serious the Ellisons are in terms of acquiring Warner Bros. It’s also very business savvy: to promote upcoming films, movies, and streaming services, commercial time is often dedicated to interconnected networks. That means that if the deal goes through and Paramount promotes a new movie, it can do so on Warner Bros. channels as well as its own.
Compared to Netflix, Paramount’s approach stands in sharp contrast, where titles can be deleted from the streamer’s library on a whim, or shows can be canceled if they don’t hit a magic number in the algorithm. Netflix, for all of its success, can be unpredictable; Paramount is attempting to build a long-term plan for media dominance with its approach. Long-term signals growth, and in the often cutthroat world of Hollywood, growth is king.
The report signals a shift in Skydance/Paramount’s fight to acquire the conglomerate.
There’s One Major Obstacle in Paramount’s Pursuit of Warner Bros.
By now, many people might be wondering why Warner Bros. decided to accept Netflix’s offer and pass by Paramount. The answer lies in a potential feud between David Ellison and Warner Bros. Discover CEO David Zaslav, and it began, believe it or not, over South Park. Paramount and Warner Bros. reportedly had a handshake deal to share streaming rights over the raunchy animated series for ten years. Ellison apparently reneged on the deal, angering Zaslav enough to pass over Paramount’s first offer when the Warner bidding wars began. Paramount COO Andy Gordon even opened up about being frozen out of the conversation, saying, “Throughout the totality of the process, we never received a single markup of the documents.” It’s hard to see Zaslav changing his mind, even if Ellison offers more cash.
One would also think a Paramount-Warner Bros. deal would be a done deal, considering that Ellison has the ear of PresidentDonald Trump. One would be wrong, as Trump lambasted the Ellison leadership of Paramount in a fiery screed today after 60 Minutes conducted an interview with Marjorie Taylor Greene. It’s a far cry from his apparently convincing the studio to finally greenlight Rush Hour 4, and it could spell trouble as FCC chairman Brendan Carr has shown himself to be more than willing to interfere on Trump’s behalf — especially after Jimmy Kimmel‘s brief on-air suspension.
It’s pretty clear that Paramount and Netflix both stand a lot to gain or lose, depending on how the bidding war for Warner Bros. shakes out. Paramount’s hostile bid proves that it isn’t going down without a fight, and that it’s willing to use every advantage it has to win. Time will tell if those advantages play out in its favor, but one thing’s for sure: No matter who wins this war, Hollywood will never be the same.
