Why Warner Bros. Discovery's Netflix Merger Outshines Paramount's Hostile Bid for Shareholders

The battle for control of Warner Bros. Discovery (WBD) has reached a critical juncture, with two competing offers vying for shareholder attention: Paramount's $108.4 billion hostile bid and Netflix's $82.7 billion merger proposal. While both deals promise transformative value, a closer examination of deal risk, financing credibility, and regulatory clarity reveals a stark asymmetry in their viability. WBD's board has already made its stance clear, but for investors, the calculus is about more than just boardroom endorsements-it's about structural integrity, financial guarantees, and long-term strategic alignment.

Deal Risk: Certainty vs. Conditional Promises

At the heart of the Netflix-WBD merger lies a binding agreement with enforceable commitments, a stark contrast to Paramount's conditional and revocable offer. According to a report by , the Netflix deal includes a $27.75-per-share structure-$23.25 in cash and $4.50 in Netflix stock-with a collar mechanism to protect shareholders during the 12–18 month regulatory review period. This binding nature ensures that both parties are legally obligated to complete the transaction, reducing the risk of last-minute termination.

Paramount's $30-per-share bid, by contrast, is a non-binding, conditional offer that can be amended or terminated at any time according to Reuters. The Warner Bros. Discovery board has criticized this structure as "illusory," noting that the PSKY proposal lacks the legal enforceability required to qualify as a "Superior Proposal" under the terms of WBD's existing merger agreement with Netflix according to Reuters. For shareholders, this means Paramount's offer introduces a high degree of uncertainty, with no assurance of closure even if the bid is accepted.

Financing Credibility: Opaque Trusts vs. Robust Debt Commitments

The most glaring flaw in Paramount's bid is its reliance on the Lawrence J. Ellison Revocable Trust, an opaque entity that provides no binding financial guarantees. As stated by the WBD board, this trust-which is not a secured commitment from the Ellison family-would only cover 7% of the $108.4 billion transaction ($2.8 billion) in the event of a willful breach. This pales in comparison to the potential harm to shareholders if the deal collapses, leaving them exposed to significant losses.

In contrast, the Netflix merger is backed by $400 billion market cap financial muscle and a debt financing package that does not require equity contributions according to Netflix. The deal's structure avoids reliance on volatile or unsecured funding sources, such as the $41 billion in equity financing Paramount has proposed-$24 billion from sovereign wealth funds and $11.8 billion from the Ellison family and RedBird Capital according to Reuters. Jared Kushner's Affinity Partners, a key component of Paramount's financing team, recently withdrew its support, further undermining the bid's credibility.

Regulatory Clarity: Pro-Competition vs. Ambiguous Pathways

Regulatory hurdles are inevitable in mega-mergers, but the Netflix-WBD deal has a clearer path to approval. Netflix has already submitted its Hart-Scott-Rodino (HSR) filing and is engaging with competition authorities, including the DOJ and EU Commission according to Netflix. The WBD board has emphasized that the merger is "pro-consumer, pro-innovation, pro-creator, and pro-competition," a narrative that aligns with global antitrust priorities according to Netflix.

Paramount's bid, however, faces a murkier regulatory landscape. The deal's reliance on foreign sovereign wealth funds and its potential impact on Hollywood's creative ecosystem have raised red flags. The WBD board warned that Paramount's offer could lead to "cost-cutting measures that make Hollywood weaker, not stronger," a concern that regulators may scrutinize according to the Financial Post. Additionally, the exclusion of WBD's TV networks from the Netflix deal-set to be spun off as Discovery Global in Q3 2026-further simplifies the regulatory process by reducing overlapping assets according to Netflix.

Strategic Implications for Shareholders

For investors, the choice between these two offers hinges on risk tolerance and long-term value creation. The WBD board has unanimously recommended rejecting Paramount's bid and supporting the Netflix merger, citing the latter's superior financing structure. The Netflix deal not only provides immediate liquidity through its cash-and-stock structure but also preserves the value of the Discovery Global spin-off, which Paramount's offer threatens to undermine according to the LA Times.

Moreover, the Netflix merger's collar mechanism-a price floor and ceiling for WBD shares during the deal's regulatory review-offers shareholders downside protection, a feature absent in Paramount's all-cash proposal according to Netflix. This structural advantage ensures that WBD shareholders are shielded from market volatility during the 12–18 month approval window.

Conclusion: A No-Brainer for Risk-Aware Investors

In the war for WBD, the Netflix merger emerges as the clear winner for shareholders. Its binding nature, robust financing, and regulatory clarity create a low-risk, high-reward scenario. Paramount's bid, meanwhile, is a house of cards built on opaque trusts, conditional promises, and a lack of credible backstops. For investors, the message is unambiguous: support the Netflix deal and avoid the speculative gamble of Paramount's hostile takeover.

As the WBD board has stated, the Netflix merger is not just a transaction-it's a strategic pivot toward a future where content creation, global distribution, and shareholder value are aligned. In an industry defined by uncertainty, certainty is the ultimate asset.