Paramount Skydance now playing the waiting game to upend Netflix's bid for Warner Bros. Discovery: sources

Core Viewpoint - Paramount Skydance has initiated "Plan D" to challenge Netflix's bid for Warner Bros. Discovery, emphasizing the regulatory uncertainties surrounding the Netflix deal and its potential implications for both the transaction and Netflix itself [1][6]. Group 1: Plans and Strategies - "Plan A" involved a $30-a-share all-cash offer from Paramount for Warner Bros. Discovery, which was deemed superior to Netflix's $27.75 cash-and-stock proposal [2]. - "Plan B" was a hostile bid aimed at persuading WBD shareholders to accept Paramount's cash offer [4]. - "Plan C" included the possibility of litigation against WBD for allegedly favoring Netflix's bid due to personal connections between executives [5]. Group 2: Financial Implications - The Netflix deal is under scrutiny as it promises shareholders a seemingly unrealistic $3 per share from the sale of WBD's cable properties, which may not materialize [4]. - Paramount argues that WBD's cable spinoff, burdened with $15 billion in debt, may only yield minimal returns for investors [11]. - Netflix has lost $160 billion in market capitalization since its one-year high in June, raising concerns about its ability to afford the deal amidst $60 billion in debt [7]. Group 3: Regulatory Concerns - The merger between Netflix and WBD is expected to face significant regulatory scrutiny, particularly from the Trump administration, which could complicate the approval process [12][16]. - There are indications that Netflix's business model may be reviewed for potential monopoly status, similar to the scrutiny faced by Amazon and Google [17]. - The regulatory environment is becoming increasingly challenging, with discussions in Washington about Netflix's market dominance [17]. Group 4: Future Considerations - WBD is reportedly interested in a "Plan E," which would involve the Ellisons and Cardinale increasing their offer [18]. - The emergence of "Plan D" suggests that Paramount may consider stepping back if regulatory challenges persist, potentially leaving the deal vulnerable [18].