Beyond the Headline
The “waiting game” Paramount Skydance is playing with Warner Bros. Discovery (WBD) is not merely stubbornness; it is a calculated siege strategy designed to exploit the inherent fragilities of the Netflix deal. On the surface, WBD’s board has rejected Paramount’s $30/share offer eight times. Case closed, right? Wrong. By refusing to walk away, Paramount is attacking the three pillars of the Netflix agreement: time, certainty, and residual value.
1. The Regulatory Arbitrage
The Netflix deal ($82.7B) is a “vertical” nightmare for antitrust regulators. Combining the world’s largest streamer (Netflix) with one of the world’s largest content libraries (HBO/Warner) creates a behemoth with unprecedented pricing power. Even with a new administration, this is not a rubber-stamp approval.
Paramount is betting on this friction. The “waiting game” here is essentially a bet that the FTC or DOJ will drag the Netflix review process out for 12-18 months. The longer the review takes, the more “deal fatigue” sets in for WBD shareholders. Paramount’s all-cash offer ($108.4B) for the whole company avoids the messy “studio vs. networks” split, potentially offering a cleaner (though debt-heavy) regulatory path. They are waiting for the regulators to do their dirty work.
2. attacking the “Stub”
The genius and risk of the Netflix deal is the spinoff of “Discovery Global” (the linear channels like CNN, TNT). Netflix doesn’t want them. WBD shareholders are being told this “stub” company has value. Paramount is aggressively arguing it is worth zero (or close to it).
By waiting, Paramount allows market realities to sink in. If the linear TV market takes another dip in Q1 2026, or if ad revenues soften, that “stub” value evaporates. If WBD shareholders start to believe the spinoff is a dead asset, Netflix’s “mixed” offer looks significantly worse than Paramount’s all-cash buyout. Skydance is simply waiting for the market to prove them right.
3. The Cash vs. Stock Spread
Netflix’s offer is partially paid in Netflix stock. This ties the deal’s value to Netflix’s daily share price. If Netflix stumbles with like a bad earnings report or a subscriber miss, the deal value drops. Paramount’s offer is fixed cash.
In a volatile market, cash is king. The “waiting game” is a hedge. If a recession fear spikes or tech stocks correct, the $30 guaranteed cash from Paramount suddenly looks like a lifeboat compared to the fluctuating value of Netflix stock. David Ellison isn’t just waiting; he’s shorting the market’s confidence in Netflix.
Wait and watch
This isn’t a bidding war anymore; it’s a war of attrition. Paramount knows they don’t have to win the board’s love; they just have to wait for the shareholders’ fear. If the regulatory clock ticks too long or the market wobbles, the “hostile” bid won’t look hostile - it will look like a rescue mission.