Hollywood's Hostile Takeover Games

The fight for Warner Bros. Discovery

Hollywood is officially in its hostile takeover era.

Paramount shocked the entertainment world Monday by launching a hostile bid for Warner Bros. Discovery, taking its offer directly to shareholders. This came just days after Warner agreed to sell its studio and HBO Max streaming business to Netflix.

Here’s the breakdown of the competing bids:

• Netflix: $72B (cash + stock), valuing Warner at $27.75/share

• Paramount: All cash, $30/share, claiming its offer gives shareholders $18B more in cash and a faster regulatory path

But because Warner already agreed to the Netflix deal, Paramount is bypassing executives and taking its offer straight to investors. This classic hostile takeover move brings financial drama and boardroom theatrics directly into Hollywood.

At stake are some of the most valuable media assets on earth: HBO, DC Comics, Harry Potter, CNN, TBS, HGTV.

Let us talk about hostile takeovers and the economics of streaming.

What Is a Hostile Takeover?

A hostile takeover occurs when a company attempts to acquire another company without that company’s leadership's approval. Instead of negotiating with executives or the board, the acquiring firm goes directly to shareholders or seeks to replace the board.

There are two common strategies:

• Tender Offer: The acquiring company offers to buy shares directly from investors at a premium, hoping shareholders accept even if management does not.

• Proxy Fight: The acquirer seeks to replace the target’s board with directors who will approve the merger.

Hostile takeovers usually emerge when:

• Shareholders believe the company is undervalued

• Executives resist an acquisition they see as unfavorable

• A competitor wants strategic assets and believes the market, not the management team, is on its side

Paramount is choosing the most visible form of this by taking its offer straight to Warner Bros. Discovery shareholders, effectively trying to override Warner’s agreement with Netflix. Talk about drama!

It’s a high-stakes, high-pressure approach that often creates public drama, especially when iconic assets are at stake. That is why this news is all over your news feed!

The Economics of Streaming

The reason everyone is fighting for Warner Bros makes economic sense. The industry is not designed for many small firms to compete; it works better with fewer larger firms. In short, both Netflix and Paramount think Warner Bros. is undervalued. However, there are a few economic principles that are also at play and help make sense of what’s going on:

1. Market Power & Consolidation

   Entertainment is consolidating for several economic reasons. Streaming margins are razor-thin, meaning firms only make money at scale. The bigger the audience, the better the economics. We call this economies of scale, when your cost per unit falls as you produce more.

   Content is also incredibly expensive to produce, with high fixed costs, while digital distribution has near-zero marginal costs. That structure rewards companies big enough to spread those costs across millions of subscribers.

   At the same time, advertising revenue is slipping, and larger firms have more market power to negotiate better ad deals. Finally, the industry is capital-intensive and heavily indebted, making consolidation an attractive way to survive rising costs and competitive pressure.

   Under these conditions, companies either scale up or get acquired. The economics of this industry reward size: more subscribers, more content, more negotiating power.

2. Regulatory Strategy Matters

   Netflix is a tech company with a few legacy cable assets. From a regulatory perspective, it is easier to approve. On the other hand, Paramount owns overlapping networks, studios, and streaming platforms with Warner Bros., which is expected to complicate approval.

   Paramount is arguing the opposite. Their position is that “Netflix is too big” and will not obtain the required regulatory approvals. In a federal securities filing, Paramount said the hostile bid will be backed in part by funds from Saudi Arabia, Qatar, and the United Arab Emirates, as well as Affinity Partners, an investment firm founded by Jared Kushner, President Donald Trump’s son-in-law.

Paramount CEO David Ellison believes their offer is more economically favorable under the regulations. In their statement, he said, “Our public offer, which is on the same terms we provided to the Warner Bros. Discovery Board of Directors in private, provides superior value, and a more certain and quicker path to completion. ”

The Bottom Line

The fight for Warner Bros. is really a fight for the future of entertainment. Whichever company wins will control some of the most iconic franchises ever created and the power to reshape streaming as we know it.

For viewers, mergers lead to consolidated market power. This may lead to

• Higher subscription prices

• Fewer platforms (but bigger bundles)

• Less creative risk-taking

• More blockbuster IP recycling

For investors, this is about extracting value from an industry caught between rising costs and slowing growth.

For the economy, it’s another example of consolidation in aging industries. We have seen this play out in telecom, airlines, tech, and now Hollywood. We are watching a textbook case of market power, shareholder incentives, and strategic competition play out in real time.

As for the next steps, Warner Bros. Discovery shareholders must decide between the offers before Paramount’s tender expires on January 8, 2026. Rejecting Netflix’s deal would trigger a $2.8 billion breakup fee. According to the betting market on Polymarket, there is now only a 19% chance that the Netflix deal goes through.