Netflix faces fierce challenge as Paramount enters billion pound battle for Warner Bros Discovery Studios

A dramatic contest for control of Warner Bros Discovery’s studios and streaming assets has intensified as Paramount Skydance launched a rival offer of 108 billion pounds, challenging Netflix’s previously announced 82.7 billion pound agreement. The high stakes manoeuvring has placed shareholders and regulators at the centre of a contest for one of Hollywood’s most valuable collections of intellectual property, including the Harry Potter series, Game of Thrones, and DC Studios’ comic universe.

Ted Sarandos, Netflix’s co chief executive, stated confidence in closing the deal, emphasising the group’s ability to adapt and execute complex transformations. Nonetheless, Netflix shares have dropped sharply since news of the bid emerged, falling nine percent since the latest update and 22 percent since initial speculation in September. The streaming giant now confronts not only a rival bid but also the prospect of rigorous antitrust scrutiny in the United States and abroad, given its dominant position with 302 million subscribers, compared to HBO Max’s 128 million and Paramount Plus’s 79 million.

Warner Bros Discovery has advised its shareholders to take no action on Paramount’s bid while it weighs its options. Under Netflix’s proposal, the legacy cable television networks would be spun off as a separate listed entity before the acquisition closes. Disagreement remains over the value of this networks division, with Paramount assigning it a value of just one pound per share, whilst other analysts, including those at Bank of America, have valued it as high as five pounds. On some measures, Netflix’s hybrid cash and stock offer could be seen as favourable compared to Paramount’s all cash approach, depending on the valuation used for the networks.

Shareholder anxiety is heightened by the risks accompanying large scale media mergers. Netflix would partly fund its offer with 59 billion pounds of new debt, although it currently stands on a relatively modest net debt position of just over five billion pounds. Paramount, in contrast, faces higher leverage but may count on additional backing from sovereign wealth funds in the Middle East and support from the Ellison family trust. Analysts suggest Paramount’s motivation to secure the deal is more urgent, given its comparably modest scale in streaming and a less extensive content library than its major competitors.

The successful acquirer will inherit not only a storied film and television archive but also a powerful direct to consumer channel. For Netflix, ownership of Warner’s assets would consolidate a transition from a technology focused group to a leading creative force in global entertainment, positioning it further ahead of traditional rivals. For investors, however, concerns over price, regulatory hurdles, and execution risk persist. Previous major transactions in the sector have often failed to deliver shareholder value, leaving market observers vigilant as the deadline for Warner Bros Discovery’s response to Paramount’s bid approaches on 22 December.

If Warner selects Paramount’s offer, Netflix would receive a break fee of 2.8 billion pounds. This fiercely competitive episode will likely set the direction for the global streaming industry and determine whether Netflix can reinforce its leadership or face renewed competition from a revitalised Paramount.