Paramount Skydance has been left reeling after Netflix dropped a “cash bomb” in the battle for Warner Bros Discovery. Netflix is reportedly switching to an all-cash structure for its $83 billion takeover bid, a move intended to blow Paramount’s hostile attempt out of the water. This strategic pivot offers WBD shareholders immediate value that Paramount’s complex, debt-heavy offer cannot match.
Paramount, supported by Oracle co-founder Larry Ellison, has offered $108.4 billion for WBD. Despite the higher price tag, the WBD board has steadfastly rejected the offer, citing the risks associated with the debt financing. Paramount is now fighting a proxy war to replace the board, but Netflix’s cash offer significantly weakens their position.
The Netflix deal targets the crown jewels of WBD: the movie studios and the streaming service. By acquiring these assets for cash, Netflix avoids the volatility of stock swaps. The linear TV assets, including CNN and Cartoon Network, are not part of the purchase and will be spun off into a separate entity.
The aggressive move has drawn the ire of US regulators. Politicians are warning that a Netflix-WBD combination would dominate the streaming landscape, holding nearly 50% market share. This regulatory backlash is expected to intensify, but Netflix is betting that the speed of a cash deal will help them navigate the storm.
Wall Street’s reaction suggests that Netflix has made the right move. WBD shares climbed 1.6% on the news, signaling that shareholders are ready to accept the cash. As Paramount scrambles to respond, Netflix appears to be in the driver’s seat for one of the biggest media deals in history.