Paramount Skydance Gains Edge Over Netflix in Battle for Warner Bros. Discovery
Behind closed doors, executives at Paramount Skydance believe the tide may finally be turning in their favor in the high-stakes race to acquire Warner Bros. Discovery. After months of back-and-forth, the Ellison-backed company is increasingly confident that its rival, Netflix, is facing growing internal and external challenges that weaken its competing bid.
Paramount Skydance recently reaffirmed its commitment to pursuing Warner Bros. Discovery, signaling it has no intention of backing away. While the deal remains contested, people close to the talks say the company believes patience is paying off. Instead of raising its offer or dramatically changing its approach, Paramount Skydance is betting that scrutiny of the competing proposals will naturally push decision-makers toward the simpler option.
Warner Bros. Discovery Pushes Back on Debt Concerns
A major sticking point in the negotiations has been Warner Bros. Discovery’s criticism of Paramount Skydance’s financing structure. The media giant has labeled the offer a leveraged buyout, pointing to the large amount of debt involved and demanding additional personal guarantees from Larry Ellison beyond the equity he has already committed.
From Paramount Skydance’s perspective, this criticism feels overstated. Insiders argue that large acquisitions in the media world almost always involve significant debt and that major banks have already signaled their willingness to support the transaction. They question whether Warner Bros. Discovery truly believes these lenders would suddenly walk away after giving firm assurances.
To Paramount Skydance, the debt debate appears less about financial risk and more about leverage in negotiations. Executives privately suggest that the focus on debt distracts from a more important question: which offer delivers the most certainty to shareholders in an unpredictable media landscape.
Netflix’s Offer Faces Structural Weaknesses
While Paramount Skydance’s deal has been scrutinized for debt, Netflix’s proposal is raising its own set of concerns. Netflix’s bid includes a mix of cash and stock and relies heavily on future asset sales to reach its headline valuation. In particular, part of the offer depends on selling off Warner Bros. Discovery’s cable networks.
That assumption has sparked skepticism. The cable business continues to decline as viewers cut the cord, and recent spinoffs of cable-heavy companies have struggled in public markets. Paramount Skydance insiders point out that these assets may not deliver anywhere near the value Netflix is counting on.
Adding to the uncertainty is Netflix’s own stock performance. During the drawn-out acquisition drama, Netflix shares have taken a noticeable hit, reducing the appeal of a deal partially paid in stock. For some investors, that volatility undermines confidence in Netflix’s bid, especially compared to a fully cash-based alternative.
Antitrust Risks and a Shift in Netflix’s Strategy
Regulatory concerns loom large over Netflix’s proposal. A merger combining Netflix with HBO Max would unite two of the most powerful streaming platforms in the world, potentially triggering intense antitrust scrutiny. Such reviews can drag on for months or years and may ultimately force concessions or block a deal entirely.
Paramount Skydance believes these risks are being underestimated. Executives argue that regulators would likely take a hard look at a deal that consolidates so much influence in the streaming market, particularly at a time when competition policy is tightening.
There’s also the question of strategy. Netflix built its success by growing organically, avoiding major acquisitions for most of its history. Its sudden pivot toward a massive media takeover has unsettled some investors, who worry about execution risks and cultural clashes. Paramount Skydance sees this shift as another factor that could weigh against Netflix as the process moves forward.
Why Cash Certainty May Ultimately Win
At the center of Paramount Skydance’s confidence is one simple belief: cash still matters. Its offer provides shareholders with a clear, immediate payout, free from market swings, asset sales, or regulatory uncertainty. In a media industry facing rapid change, that certainty carries weight.
Some prominent investors agree. Well-known value investors have publicly emphasized that a straightforward cash deal can be more attractive than a complex transaction built on future assumptions. That sentiment, Paramount Skydance believes, could grow stronger as market volatility continues.
Warner Bros. Discovery CEO David Zaslav deserves credit for engineering the bidding war that brought the company to this moment. By reducing debt, strengthening the studio business, and stabilizing streaming operations, he transformed an early offer into a fierce competition that lifted the company’s valuation.
Now, Warner Bros. Discovery faces a defining choice. It can accept a clean, cash-based exit or pursue a more complicated deal that carries higher risks and longer timelines. Paramount Skydance is betting that when the dust settles, simplicity and certainty will prove more persuasive than complexity and that its bid may ultimately emerge as the safer path forward.
