Who Will Control Warner Bros?

Here are the latest developments around the colossal deal between Netflix and Warner Bros. A deal that, if completed, could radically change the media landscape, reshape the players in the entertainment industry, and yes, potentially send Netflix’s stock soaring.

THE OFFERS

Let’s start with the basic facts. Netflix is offering 27.75 per share, with the total consideration reaching 72 billion for Warner’s studios and streaming operations. If we also factor in the debt of these units, the total cost for Netflix rises to 83 billion.

The offer includes 23.25 in cash and 4.50 in Netflix shares, along with a collar mechanism designed to limit risk for the buyer.

On the other side, Paramount, led by David Ellison, has submitted an even more aggressive proposal, offering 30 per share for the full acquisition of Warner Bros, with a total value of 108.4 billion including debt.

Looking strictly at the numbers, one might say that Paramount’s proposal is superior. So why is Warner Bros’ management saying no?

Because the deal with Paramount is considered by Warner’s board to be inadequate and high risk. The core issue is that the financing behind the proposal is not clear. Warner requested a personal guarantee from Larry Ellison, the billionaire father of David Ellison, in order to ensure that the deal could actually be executed. Larry Ellison did provide a guarantee of more than 40 billion.

However, the proposal is based on a revocable trust, a type of trust structure that can be altered or canceled. This does not offer the level of transparency and security required for a transaction of this scale.

By contrast, Netflix has already secured financing through bridge loans totaling 59 billion. Of that amount, 25 billion has already been restructured into fixed credit facilities and delayed draw loans. This provides far greater certainty. It is not just about the size of the offer, but about the stability and clarity of the financing.

That is why Warner Bros’ management publicly rejected Paramount’s proposal, describing it as vague, incomplete, and carrying significant risks for shareholders. This rejection was not random. It followed six previous failed proposals and an extensive strategic review.

Paramount, however, is not backing down. It responded with a lengthy letter to Warner’s shareholders, accusing management of refusing to negotiate, deliberately ignoring the offer, and attempting to derail the bid in the hope that it would simply fade away.

As if the corporate battle were not enough, the conflict has now spilled into the political arena. Both sides have enlisted political figures and lobbyists with ties to Donald Trump, aiming to influence regulatory and political decisions.

Netflix has support from figures such as Kellyanne Conway, May Mailman, and the powerful lobbyist Brian Ballard.

Paramount is backed by Jason Miller and the former head of the Department of Justice antitrust division, Makan Delrahim. Even Warner itself has brought in Chris LaCivita and Tony Fabrizio, advisers from Trump’s campaign circle. It is clear that major interests are at stake.

At the same time, pressure is also coming from large shareholders. Harris Associates, the fifth largest shareholder in Warner with a 3.9 percent stake, has stated that it supports management but does not rule out a new proposal from Paramount, provided it is better and more clearly structured.

As they put it quite bluntly, “the ball is in Paramount’s court.”