WBD, Paramount regulatory path might be easier than Netflix tie-up
The Paramount logo is displayed above the entrance of Paramount Studios in Los Angeles, California on February 23, 2026.
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a day later Paramount Skydance emerged as the winner of takeover of other media giant Warner Bros. DiscoveryQuestions about companies’ regulatory pathways are increasing.
WBD’s board of directors said Thursday that Paramount’s revised offer of $31 per share is superior to the current offer. netflixIt prompted the streamer to announce that it was pulling out of the deal altogether, paving the way for Paramount.
Paramount’s increased bid at $30 per share was the latest in a series of moves it has made after launching a hostile bid to acquire WBD late last year. He lost the bidding war, initially offering Netflix $27.75 per share.
Paramount’s final offer included a $7 billion breakup fee to be paid if the deal did not win regulatory approval. And it has already paid off the $2.8 billion breakup fee WBD owes Netflix if the deal falls through, according to a filing Friday.
But media industry experts said the Paramount deal appears more likely to pass government scrutiny than it did when Netflix was involved.
Netflix and Paramount
Netflix co-CEOs Ted Sarandos and Greg Peters said Thursday that matching that with Paramount’s increased bid was “no longer financially attractive.”
Although Netflix executives say they are “extremely confident” the deal will be successful If approved, the merger would bring together two over-the-top streaming services — Netflix and Paramount+ — and could potentially raise prices for consumers and reduce competition.
In early December, Trump said the Netflix-WBD deal “could be a problem” because of the increased market share Netflix would gain, and that he would be involved. He walked back those comments earlier this month, saying the deal would be entirely at the Justice Department’s discretion.
While the size of Netflix and WBD’s combined holdings is one of the companies’ biggest antitrust hurdles, the issue could still come up for Paramount.
Both Paramount and WBD have expanding TV network portfolios, with Paramount+ hitting 78.9 million subscribers and HBO Max hitting 131.6 million subscribers by the end of 2025, according to its latest earnings report.
Paramount executives argued that one of the pros of their offer was that a deal with the media company would result in less government scrutiny. Father of Paramount Skydance CEO David Ellison Seer Its co-founder, Larry Ellison, is known to have close relations with President Donald Trump.
Trump’s son-in-law Jared Kushner support Paramount deal, according to a filing with the Securities and Exchange Commission.
Still, Paramount’s proposed deal had faced criticism on the grounds that it could potentially be financed by Saudi Arabia’s sovereign wealth funds; Abu Dhabi, United Arab Emirates; and Qatar. Company it has been said before that they agree to give up all management rights, including representation on the board of directors of these organizations.
California Attorney General Rob BontaA Democrat warned Thursday night that the merger “is not a done deal” and would face strong scrutiny from the California Department of Justice, which is conducting an open investigation into the deal.
And Democratic Sen. Elizabeth Warren of Massachusetts said in a statement that the Paramount and WBD merger was “an antitrust disaster that threatens higher prices and fewer choices for American families.”
Less potential for anxiety
Analysts from Raymond James said they believe the Paramount-WBD deal could pose much less risk in terms of regulatory approval than the Netflix partnership.
In a note published Friday, analysts said Paramount’s regulatory path is “significantly easier” than Netflix’s, but it won’t be “a piece of cake.”
“Of course, there are new challenges with this deal in terms of news, cable networks, international linear networks, etc., but we still think the WBD/PSKY deal is more acceptable as an all-in,” analysts wrote. “And we believe PSKY’s political standing with the current US administration is much stronger than Netflix’s, especially following the backlash to the WBD/NFLX deal.”
Analysts noted that questions remain about how the competitive market for the companies will be defined by the Justice Department and speculated that Netflix decided not to match Paramount’s superior offer due to “possibly brutal regulatory scrutiny.”
A Friday note from Morningstar analysts echoed those sentiments. Analysts said the move was right for both Netflix and Paramount, as they believed Netflix had unnecessarily overpaid for WBD’s streaming and studios.
Specifically, Paramount aimed to acquire all of WBD, including pay TV networks such as CNN, TBS, and TNT, while Netflix only wanted the company’s studio and broadcast assets.
“This is the best outcome for Warner shareholders, in our view we thought the best offer would be $30 in cash given the greater likelihood of receiving regulatory approval and the uncertainty regarding the value and risk of the network business they will retain,” the analysts wrote.
Analysts added that they do not expect Paramount to face any regulatory issues during the approval process.
‘Horizontal consolidation’
Joseph Kalmenovitz, an assistant professor of finance at the University of Rochester’s Simon Business School, said Paramount’s timing of the bid was likely strategic.
“Not only did David Ellison outperform a Hollywood board, he timed the regulatory cycle perfectly,” Kalmenovitz said. “The populist, bigger-is-bad philosophy is over; the deal-friendly order is back.”
Still, Paren Knadjian, a partner at consulting firm EisnerAmper, said the regulatory path toward Paramount remains nuanced and is not a done deal. While concerns about the Netflix-WBD deal have largely focused on library content, the Paramount-WBD deal is more of an effort at “horizontal consolidation” across cable TV, sports, streaming and news, he said.
“I think the biggest thing we’re going to focus on is getting intellectual property under one roof,” Knadjian told CNBC. “What power does this give to this new entity in terms of its ability to charge more?”
Knadjian said Paramount will face political concerns not only from state and federal politicians but also from the merger of CNN and CBS under one umbrella. Concerns about blockbuster franchises like “Star Trek” and “Harry Potter.”
Ultimately, approval of the deal will depend on what concessions the two companies are forced to make to allay fears of a possible media monopoly.
“Regulatory pressures, political pressures, these are things that will certainly delay the deal and make it more complicated, and I think there will need to be significant concessions to make that happen.
There are many factors to this. It is much more complex than many deals we have seen in the past,” Knadjian said.
– CNBC’s Lillian Rizzo contributed to this report.
