It was all over in an instant.
After six months of pursuing a rare and acrimonious hostile takeover, the billionaire family that owns Paramount Global conglomerate won Warner Bros. Discovery on Thursday, a legendary Hollywood studio and streaming service saddled with declining legacy cable networks. The board deemed Paramount’s 11th bid to be “superior,” and suddenly Netflix folded.
It was over.
It’s the kind of thing that rarely happens and even more rarely succeeds. Even the leadership at Paramount must be pinching themselves.
For months, Hollywood has been transfixed and horrified by the prospect of either Netflix or Paramount winning the day. On one hand, the streaming service that has become the most dominant force in the entertainment industry was threatening to take over yet another major company, with a widespread belief that doing so would kill theatrical exhibition.
It didn’t matter how many times Netflix co-CEO Ted Sarandos promised to maintain the same number of theatrical releases if he bought the Warner Bros. studio, or vowed to protect a 45-day window ahead of streaming (give or take some days) – he was not really believed. Sarandos had spent nearly 20 years arguing that consumers should be given maximum choice for their filmed entertainment: theaters, if you really want to leave your house, pay for parking and a babysitter and popcorn, or the very same content in the comfort of your living room for a fraction of the price. Your choice!
On the other hand, Hollywood is equally concerned that Paramount would be a dangerous steward for the cherished Warner Bros. assets, notably the cable news network CNN. The Ellisons have already shown a distinct right-leaning bent in their statements and a close relationship to President Trump.
They’ve already generated criticism and worry after appointing neo-conservative Bari Weiss to run CBS News, where she has been busy destroying a precious asset of democracy by imposing her politics on one of the most powerful news networks in the country. Many worry, justifiably, that she will be put in charge of CNN as well and angle it rightward.
Overall the Warner deal has driven massive anxiety within an already-careworn entertainment industry, struggling to compete in the age of streaming and AI.
Rival studios feared the power imbalance of a Netflix acquisition, which would have made the streamer far and away the largest content creator and buyer in the universe, with less power for others to compete. Creatives and their agents and managers and lawyers understood that this also likely meant a permanent end to the residual model that sustains creatives during dry spells of work. Netflix had been the prime mover in ending the residual system that held sway for decades.
No one was happy at the idea of more consolidation – more jobs lost, fewer buyers for projects, less competition and a shrinking iceberg for content. Everyone from left-wing and right-wing members of Congress, to union leaders to state attorneys general were concerned about feeding the dominance of Netflix. That combined with a residual resentment toward the streamer within the industry.
It seems that Sarandos’ charm offensive among European regulators came too late; and his visit to the White House on Thursday may well have convinced him to end the bidding process just a few hours later.
The win here is for David Zaslav himself and Warner Bros. Discovery shareholders, who only a year ago were holding stock worth only $11 a share. Zaslav has a winning bid at a stunning $31 per share.
But what is the future of Warner, really? The company has been sold and resold three times in the last 25 years – in 2001 with the disastrous AOL acquisition of Time Warner; the unsuccessful acquisition of Time Warner by AT&T in 2018; and the spinoff of WarnerMedia and merger with Zaslav’s Discovery Network in 2022.
But just because it works out for Zaslav does not mean it makes sense for Paramount or the future of Warner Bros. going forward.
A Paramount acquisition will continue to saddle both companies with significant debt. It means, certainly, more job losses and shrinking of theatrical output. It means, likely, the arrival of oil-rich Gulf states into ownership of Hollywood assets. It means an uncertain future for the cable assets of Discovery. And it leaves a big question mark for the future of CNN.
Let’s hope, at least, they don’t touch HBO.
