Why Netflix’s $82.7B Offer Beats Paramount’s Risky $108.4B Bid for WBD

The recent battle for Warner Bros Discovery has evolved into a high-stakes contest between Paramount Skydance’s full takeover bid and Netflix’s partial acquisition post spin-off. Paramount offers US $108.4 billion enterprise value for WBD in full, relying heavily on debt (approximately US $54 billion) and equity guarantees (US $40 billion from Larry Ellison). However, WBD’s board has publicly questioned the solidity and binding nature of those guarantees, especially since they appear tied to a revocable trust rather than a fully pledged equity commitment.

In contrast, Netflix’s deal—valued at US $82.7 billion enterprise value—would exclude WBD’s Global Networks (to be spun off as Discovery Global), reducing regulatory exposure and preserving value for shareholders without assuming as much risk. WBD shareholders would receive US $27.75 per share in the Netflix deal. Paramount’s offer is higher on paper (US $30 per share all-cash), but after accounting for US $4.7 billion in breakup penalties, interest on new debt, and debt-exchange costs, the net benefits narrow substantially.

The structure and financing are central issues. Paramount’s bid, described by WBD as a leveraged buyout (LBO) with nearly US $87 billion of debt and equity financing demands, presents execution risk—particularly because the equity backstop lacks public assurance. WBD board calls Paramount’s claims of a “full backstop” misleading, alleging the Ellison family’s revocable trust could withdraw support and is not the same as an equity commitment by a controlling shareholder.

Regulatory risk looms large for both deals. Netflix’s agreement must pass antitrust and competition scrutiny globally, especially due to its growing scale and content control if it absorbs Warner Bros’ key franchises. Paramount counters that the Netflix deal spins off much of the contentious cable and news assets (Discovery Global), potentially reducing regulatory friction. Paramount has also pointed to Comcast’s recent spin-off of Versant Media, whose weak post-IPO stock performance casts doubt on the value of traditional linear networks and supports Paramount’s proxy argument that Discovery Global may be worth much less than expected.

Strategic implications are significant. WBD’s board appears to be balancing short-term cash value against long-term strategic stability. Choosing Netflix’s offer may provide smoother execution, more predictable regulatory exposure, and lower financial risk, while Paramount’s higher offer could appeal to shareholders chasing immediate value—but with greater downside. The outcome of this duel could reshape media industry consolidation trends, especially around how traditional content owners and streamers converge, how cable and linear assets are valued, and how acquisition financing is structured in an era of tighter regulatory scrutiny.

Open questions remain:

• Will Paramount raise its offer further or improve financing guarantees to convince WBD and shareholders?
• How will regulators view the combined Netflix-Warner studios entity, especially regarding competition and media concentration?
• What valuation will the market assign to Discovery Global upon spin-off, and how does that affect the comparative attractiveness of Netflix vs. Paramount proposals?
• Is WBD’s assessment of Paramount’s credit and execution risk shared by significant institutional investors, or might pressure build for an alternate outcome?