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While Christmas movies often fill the air with romance and holiday cheer, this December’s spotlight is reserved for a different kind of drama: the high-stakes battle for control of Warner Bros. Discovery, a giant in the world of entertainment. This unfolding corporate saga rivals any blockbuster plot and might even inspire some strategic moves for investors looking to diversify their portfolios. Indeed, there’s no business quite like show business.
In a dramatic twist this week, Paramount Skydance, the powerhouse behind hits like the “Mission Impossible” series and “Top Gun,” launched a staggering $108 billion hostile bid for Warner Bros. Discovery. This renowned studio is famous for creating the “Harry Potter” films and owning HBO, the network behind iconic series like “Game of Thrones.”
The timing of Paramount’s bold move adds an intriguing layer to the story. Warner Bros. had previously accepted an $82.7 billion offer from Netflix, the streaming behemoth known for its productions like “Bridgerton” and “Stranger Things.”
Netflix’s bid, valued at $27.75 per share in a mix of stock and cash, is now being challenged by Paramount’s offer of $30 per share, entirely in cash. This higher offer underscores Paramount’s determination to secure Warner Bros., with whispers in industry circles suggesting that they might raise their bid even further.
Netflix is offering $27.75 a share in stock and cash. Paramount is willing to pay $30 a share – in cash.
This price, which, rumour has it, could be raised soon, reflects its eagerness to acquire Warner Bros.
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Robert Fishman, of the New York media analysts Moffett Nathanson, said: ‘Paramount genuinely needs an acquisition to compete with Netflix, Disney and Amazon, all of which have enjoyed a substantial head-start in global scale, content output and engagement.’
Since September, Warner Bros.’ shares have surged by 120 per cent to $30, spurred by the assessment that someone would find its treasure trove of content irresistible. HBO is the jewel in this crown.
Shares in Netflix are down by 22 per cent over the same period, owing to concern that it may be tempted to raise its offer, such is HBO’s pulling power.
The share price fall also reflects the cast list of personalities lobbying for Paramount’s campaign. Its chief executive is David Ellison, son of Larry – co-founder of tech titan Oracle and the world’s third-richest man.
Ellison is also a pal of Donald Trump, who has a close interest in the next owner of Warner Bros. Jared Kushner, the US President’s son-in-law, is putting up some of the finance for the bid, alongside Saudi and Qatari funds.
The excitement over the bid is a reminder that, in 2025, the focus has been on the US tech titans. Little airtime has been devoted to the seismic change in the entertainment industry.
Even our own ITV is the subject of a bid, hoping to stay alive at a time when audiences are shifting away from traditional linear television to streaming.
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WHAT HAPPENS NEXT
An early denouement to the Warner Bros. affair is unlikely, as it will be carefully scrutinised by the US Department of Justice (DoJ). Trump may have the final word.
Ben Barringer, head of technology research at Quilter Cheviot, said: ‘We are just at the beginning. Paramount will hope that it has blown Netflix out of the water with this bid but, even if it has, any review by the DoJ is likely to result in a long process.’
Prepare for speculation about the other plans of the major players. Netflix has ‘historically been a builder, not a buyer’, as Barringer puts it, and so it could look elsewhere if it cannot have Warner Bros. There may be more takeover action in the sector.
Meanwhile, the attraction of Warner Bros. is highlighting the entertainment arms of the tech players. Amazon and Apple have streaming services, while YouTube, a division of the Google group Alphabet, has 2.7billion monthly users. This beats Netflix.
A portfolio dominated by tech stocks is hazardous at present. Yet it’s important to have exposure to these game-changing companies .
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LOVE INTEREST, AND THE RIVALS
Nine of the analysts that follow Warner Bros. consider the shares a ‘buy’ at this elevated level, while the remaining 12 rate them worth holding.
This hints that Netflix or Paramount will be forced to up the ante, or that there will be a turnaround in events with the appearance of another bid.
Before it became an object of desire, Warner Bros. was set to tackle its debt burden by splitting off CNN and its other struggling cable channels into a separate company. Paramount would merge CNN with its news channel CBS.
Netflix has no interest in the cable operations, regarding them as old-fashioned and out-of-keeping with its (albeit former) status as a tech superstar. In 2013, Netflix was one of the era’s hot tech stocks, but in 2018 it chose to concentrate on content.
Anyone who backed Netflix in 2013 will now be applauding the subsequent leap in the shares from $5 to $96. This week UBS has set a target price of $150.
Analysts may be impressed by the company’s successful moves into advertising, gaming and live sport, but if you are minded to bet on Netflix today, be aware that its aim to be a vertically integrated media powerhouse depends on the persuasive powers of management, led by Ted Sarandos. Does Sarandos have a script that can win Trump’s approval?
Shares in Paramount are 33 per cent higher than at the start of the year at $14. But they have dropped in recent weeks, perhaps because the corporation’s lack of scale has become all too evident.
The shares are rated a ‘hold’ because the firm could overspend in its quest to be monarch in a sphere where content is king.
For the moment, Comcast, the Sky group, has played a bit-part in this saga, although this $97.6 billion company would love to add Warner Bros to its NBC Universal division, maker of the box office smash Wicked: For Good.
Comcast could yet enter the fray, although it is busy with its proposed purchase of the broadcast arm of a British entertainment player ITV.
Comcast shares – which most analysts rate a ‘hold’ – have tumbled by 27 per cent this year to $27 amid concern that it is splashing out more than its competitors on content. ITV is also a ‘hold’.
It may have a US suitor in the shape of Comcast, but it reflects the industry’s woes as a result of its declining viewer numbers and advertising revenues.
ONE THAT GOT AWAY, FOR NOW…
The $192billion Walt Disney empire was created in 1923. Today, the House of Mouse encompasses the Marvel and Star Wars franchises, the Simpsons, Pixar Animation, the ABC TV network, the Disney+ and Hulu streaming services, theme parks and cruises.
This week Walt Disney completed a $1billion deal with ChatGPT group OpenAI under which Disney and Pixar characters can be used in social media videos.
Walt Disney last month said it would steer clear of the tussle for Warner Bros., declaring: ‘We’ve got a great portfolio and don’t need to do anything.’
Whether or not this is the case, analysts rate the shares a ‘buy’ at $112, with an average target price of $136. They seem encouraged by the popularity of the parks, streaming service subscriber growth, and the content ‘slate’.
This view is good news for Walt Disney investors like me, who were intrigued to learn that it was in Netflix’s sights before Warner Bros. became the target.
Who knows how this could unfold?
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