Paramount, a subsidiary of Skydance Corporation, and Netflix are both pursuing the acquisition of Warner Bros. Discovery (WBD), but they may encounter significant antitrust challenges, according to Scott Wagner, co-head of the antitrust practice at Bilzin Sumberg. WBD has already agreed to a cash-and-stock deal with Netflix valued at $27.75 per share. However, Paramount has countered with a hostile all-cash tender offer of $30.00 per share, claiming its bid is superior.
Wagner noted that regardless of whether it is Netflix or Paramount, both companies would face scrutiny from regulators. He explained that while Netflix holds a larger market share in streaming, Paramount's involvement would still raise important considerations regarding market competition. Paramount's bid includes the entirety of WBD, encompassing its cable assets like CNN, which could further complicate regulatory approvals.
Wagner suggested that the acquisition landscape may require adjustments from either buyer to satisfy regulatory bodies. For example, if Netflix were to pursue the acquisition, it might need to consider including CNN in its deal to alleviate antitrust concerns, despite its current focus on acquiring WBD's studio and streaming divisions alone.
The approval process for such a merger is expected to be lengthy, potentially taking one to two years, and will involve scrutiny not just from U.S. authorities but also from international regulators. Wagner emphasized that the final decision could include conditions that may not be requested by U.S. regulators, thus indicating a complex negotiation landscape ahead for both Paramount and Netflix in their pursuit of Warner Bros. Discovery.