Netflix vs. Paramount: The Warner Bros. Takeover Battle Intensifies, Raising Fears of a Collapse in the Theater-Centric Distribution Model

‘Deal of the Century’ Takes Another Turn
Paramount Moves to Quell Financing Concerns
Whoever Wins, the Decline of Movie Theaters Seen Accelerating

Paramount, which had previously participated in the bid to acquire Warner Bros. Discovery only to be outpaced by Netflix, has thrown down the gauntlet once again by launching a hostile takeover offer. The revised proposal is widely viewed as superior to the terms put forward by Netflix. As the battle over Warner Bros.—a symbol of Hollywood itself—escalates into a full-scale big-deal war, the outcome of this acquisition is expected to fundamentally reshape the Hollywood studio system and the broader theatrical ecosystem.

“Reversed Warner Bid”: Paramount Submits a Revised Offer

According to The Wall Street Journal and other media outlets on the 22nd (local time), Netflix agreed earlier this month to acquire Warner Bros. Discovery for $72 billion. However, Paramount has since submitted a hostile bid, reigniting and intensifying the takeover battle. Until last week, momentum appeared to favor Netflix, but Paramount’s refusal to walk away has triggered what amounts to a second round of the contest.

Previously, Paramount proposed an all-cash acquisition valued at $108 billion, or $30 per share. This exceeded Netflix’s $83 billion mixed stock-and-cash offer by $25 billion. Warner Bros.’ board, however, raised concerns over the uncertainty surrounding Paramount’s financing. In particular, questions lingered over how actively Larry Ellison—the founder of Oracle and father of Paramount CEO David Ellison—would support the deal. Warner Bros. also pointed out that, if acquired by Paramount, the company might lack sufficient flexibility to operate stably and manage its finances during the more than one year required to secure regulatory approval for the merger.

The political backstop Paramount had hoped for has also faded. Affinity Equity Partners, a private equity firm run by Jared Kushner, son-in-law of President Donald Trump and previously aligned with Paramount, announced that it would no longer be involved in the Warner Bros. bid. An Affinity spokesperson said, “We continue to believe Paramount’s proposal is strong and well-founded,” but added that “the investment landscape has changed significantly since our initial involvement last October.”

Ellison, Oracle Founder and Paramount CEO’s Father, Provides a $40.4 Billion Personal Guarantee

Even so, Paramount has not relented. Instead, it revised the terms of its hostile tender offer in a decisive move. On the 22nd, Paramount announced that Ellison would provide an irrevocable personal guarantee covering the full $40.4 billion required for equity financing related to the Warner Bros. acquisition. The company explained that this guarantee adds an extra layer of security on top of funds already committed by RedBird Capital and sovereign wealth funds backing the deal.

Paramount also said it would disclose financial records related to the Ellison family trust supporting the transaction, a move aimed squarely at dispelling concerns over the credibility of its financing. The company has reaffirmed that it is maintaining the same all-cash acquisition terms, seeking to purchase Warner Bros. in its entirety, including cable channels such as CNN, TNT, and Food Network.

In addition, Paramount raised the breakup fee payable if the deal collapses due to regulatory opposition to $5.8 billion. By contrast, Warner Bros. would owe Netflix a $2.8 billion penalty if it terminates its existing agreement. Paramount also extended the tender offer deadline from January 8 to January 21. “We have repeatedly demonstrated our commitment to acquiring Warner Bros.,” Paramount CEO David Ellison said. “Our fully financed, all-cash offer, backed by firm guarantees, remains the best available option to maximize value for Warner Bros. shareholders.”

A Platform’s Victory, a Theater’s Defeat

Paramount’s determination to secure Warner Bros. reflects its belief that the storied studio is essential to future media dominance. Netflix, which began in the late 1990s as a DVD rental business, later evolved into a streaming platform. Its explosive growth during the COVID-19 pandemic, when audiences were unable to visit theaters, was followed by an aggressive push into original content production, transforming the company into a full-fledged entertainment powerhouse. As consumption has increasingly shifted away from cinemas and television toward streaming platforms, Netflix’s competitive advantage has only deepened.

From Paramount’s perspective, checking Netflix’s expansion requires preventing it from absorbing Warner Bros. With its 102-year history, Warner Bros. is a Hollywood blue-chip studio, encompassing film and television production, iconic intellectual property such as the Harry Potter franchise, and assets including HBO and other cable networks and streaming services. Should Netflix succeed in acquiring Warner Bros., it would gain not only premier IP but also traditional studio infrastructure, effectively becoming a vertically integrated entertainment conglomerate. Paramount, by contrast, has seen its competitive position erode. In the third quarter, the company reported revenue of $6.7 billion and a net loss of $257 million, missing market expectations. Reuters described the bid as “a last-ditch effort to create a media heavyweight capable of rivaling Netflix.”

Industry observers, however, broadly agree that regardless of who prevails, the volume of films released exclusively in theaters is likely to shrink, or theatrical windows to shorten. Warner Bros. is a major distributor of blockbuster franchises such as Batman and Dune, which traditionally draw audiences into cinemas. Yet if Netflix or Paramount internalizes Warner Bros.’ production and distribution systems within a platform-centric model, the very rationale for theaters could be fundamentally undermined.

The U.S. cinema industry is already under structural pressure from the expansion of streaming services and a decline in tentpole releases. While attendance has partially recovered since the pandemic-triggered wave of theater closures, the supply of new films has not returned to pre-pandemic levels due to fewer productions and ongoing scheduling delays. This has translated directly into weaker theater revenues. CJ CGV, for example, has exited the U.S. theater business after 15 years, closing its Buena Park location in March and deciding to permanently shut its Los Angeles theater this September.

Against this backdrop, the Warner Bros. takeover battle is amplifying anxiety across the exhibition sector. The Wall Street Journal reported that the industry’s greatest concern is that if a major streaming company acquires a traditional studio, the strategic importance of theatrical releases will diminish, and the window between cinema release and streaming availability will narrow further. In particular, analysts warn that a Netflix victory could lead to an even stronger platform-first distribution strategy, limiting theatrical releases to only the biggest franchises or titles with guaranteed brand power. Even if Paramount ultimately acquires Warner Bros., cost-cutting pressures and the pursuit of profitability are expected to drive adjustments to theatrical release strategies.