How Warner Bros. Discovery's CEO decided to sell to Netflix— and why the media giant's auction may not be over

Core Viewpoint - Warner Bros Discovery (WBD) has accepted a $30-a-share all-cash takeover bid from Netflix, valuing the company at approximately $30.75 per share, amidst competing interest from Paramount Skydance [1][2][14]. Group 1: Bidding Dynamics - Paramount Skydance made a $30-a-share bid for WBD, while Netflix's offer effectively values WBD at $30.75 per share [1][14]. - WBD's board, led by CEO David Zaslav, accepted Netflix's bid less than 24 hours after it was made, indicating a swift decision in a competitive bidding environment [2][8]. - The Ellisons from Paramount Skydance are unhappy with the outcome and are considering a counterattack by appealing directly to WBD shareholders [4][5]. Group 2: Financial Considerations - Netflix's offer includes a $5.8 billion breakup fee and is backed by significant cash reserves, making it a more secure option compared to Paramount Skydance's bid [8][10]. - Paramount Skydance's financial strength is questioned, as it relies on Larry Ellison's net worth of $259 billion to support its bid, which is significantly lower than Netflix's market cap of over $400 billion [10][11]. - The valuation of WBD's cable assets is debated, with Paramount Skydance believing these assets are worth closer to $2 per share, while Netflix's offer includes a valuation of $3 per share for these assets [18][19]. Group 3: Regulatory and Strategic Implications - The potential merger between Netflix and WBD could face antitrust scrutiny, particularly from the Trump administration, due to the combined entity's dominance in the streaming market [15][18]. - Netflix's CEO Ted Sarandos has reportedly developed a relationship with President Trump, which may help mitigate regulatory concerns regarding the merger [22][23]. - The Ellisons are preparing to argue that Netflix's offer has significant flaws, particularly regarding the valuation of WBD's assets post-spin-off [18].