Harry Potter, CNN and Gulf money: who will win the fight for Warner Bros.?
In December, the oldest movie studio in Hollywood Warner Bros. Discovery unfolded a struggle: streaming service Netflix on December 5 made an offer to buy part of its business for $83 billion. Paramount Skydance heir Oracle three days later put up its price: $108 billion for the entire Warner Bros. Discovery. Technically, it's about price, but really it's about which media model is more viable.
Why is Warner Bros. even selling out
The Warner Bros. business is more than a century old: A movie studio founded in 1923 by four immigrants from the Russian Empire (now Poland), in 2025 it owns one of the world's most famous streaming services - HBO Max, one of the world's largest comic book publishers - DC Comics, the largest news channel - CNN, TV networks including family and sports, and numerous intellectual rights to the most famous entertainment universes - Game of Thrones, Harry Potter, Batman, the full list would take a small volume.
Warner Bros. became the first studio to surpass $4 billion in worldwide box office receipts by the third quarter of 2025 with just 11 films - by comparison, six years ago the company achieved comparable results with 20 films. That said, the operating results aren't converting much into a sustainable model.
The problems are two - business structure and debt. Warner Bros. Discovery emerged in 2022 after the spin-off of WarnerMedia from AT&T and its takeover of Discovery - the whole deal was valued at $43 billion. The head of Discovery David Zaslav then called the goal of attracting in the long term 400 million subscribers to streaming services around the world for the combined company. Three years later, the company reports 128 million subscriptions. Over the summer, ratings agency S&P downgraded the combined company's credit rating to junk BB+, citing structural problems and the decline of linear TV. It is no longer offset by growth in streaming and studio production.
The situation is exacerbated by a high debt load. United Warner Bros. Discovery started with a net debt of over $50 billion and over the following years had to allocate a significant part of its cash flows to servicing it.
"Digital" vs. big money
In June, Warner Bros. Discovery announced that it was preparing for a split. The studio assets - Warner Bros. Television and Motion Picture Group, DC Studios, HBO and HBO Max, as well as the gaming, travel and retail businesses were to be separated from the television side - CNN, TNT Sports in the U.S., Discovery, the major European terrestrial channels, as well as Discovery+, Bleacher Report and the future streaming of CNN.
Most of the debt was to remain on the currently most profitable television portion, while the studio portion was to be cleared of debt.
In late October, Warner Bros. Discovery reported that the board of directors is considering the sale of part of the business or the company as a whole. By November, the main contenders remained two - Netflix, which is ready to buy a part without television and Paramount Skydance - claiming the entire company at once.
Mission impossible?
If the merger with Paramount goes through, the combined entity will become a media giant capable of competing with Netflix and Disney.
Paramount Skydance owns the rights to "South Park," "SpongeBob SquarePants," "Star Trek," "Scream," "Ninja Turtles," "Mission Impossible," MTV and CBS projects. If Paramaount and Warner Bros. merge, the combined group would include the largest package of sports rights - NBA, NFL, NCAA, MLB and Olympics.
It will have an extensive media library of the two largest united Hollywood film studios, and its own production facilities and theater network will allow it to attract first-tier directors.
However, the total debt of the merged corporation after the merger may exceed the astronomical sum of $100 billion, according to Stephen Flynn, senior credit analyst at Bloomberg Intelligence. Debts are a problem, Freedom Finance Global analyst Saken Ismailov confirmed in a conversation with Oninvest.
The huge debt load is likely to prevent the full potential of all these assets from being deployed
Paramount owner David Ellison, producer of dozens of films, including "Mission Impossible: Outcast," believes the merger will bring the company to an unprecedented level of competition. But he made a fatal mistake: as Bloomberg wrote, fearing the deal might not go through, he sent Warner Bros. a threat of litigation through lawyers instead of a revised offer. WBD then announced that the deal would go through, but with Netflix. Ellison Jr. has since raised the offer price, but WBD was not satisfied with the financial guarantors of the deal. On December 22, David Ellison's father, Oracle CEO Larry Ellison, announced that he would personally act as a guarantor of the $40.4 billion deal. The Oracle CEO also agreed not to revoke the family trust and not to transfer its assets during the life of the deal.
Netflix. Betting on content
For Netflix, Warner Bros. Discovery is first and foremost a source of high-quality intellectual property. Combining the online movie theater's own platform with WBD and HBO/Max studios creates the largest library of content among streaming services.
The merger would give Netflix the rights to the Harry Potter franchise, DC comics, the Game of Thrones saga, many HBO series and the classic Warner Bros. movie catalog.
For Netflix, the merger means a jump in premium content, less dependence on third-party studios and licenses, and the possibility of endless franchise continuations, says Saken Ismailov. But the merger also brings potential problems for the combined streaming service. Because of the significant audience overlap, Neflix-HBO's combined revenue could shrink.
It's worth considering that the merger will probably add almost no subscribers because the audiences overlap a lot, and most HBO Max subscribers likely already have a Netflix subscription. Disney, Amazon, and other players also retain strong franchises and their place in the media market, and users will simply have multiple subscriptions to those services.
Warner Bros. and Netflix are acting like the deal is already done, writes Bloomberg's Lucas Shaw. On Dec. 17, WBD CEO Zaslav met with Netflix directors Sarandos and Peters at his studio - and his new partners told Warner Bros. management about their vision and promised that there would be no large-scale layoffs.
The Trump factor
Both deal options are complicated by politics and regulators. The merger of Warner Bros. Discovery's merger with Netflix could be thwarted by antitrust authorities. Merging the major streaming services Netflix and HBO Max into one company could be seen as an excessive concentration of market power. As part of its offer, Netflix has pledged to pay Warner Bros. $5.8 billion if the deal falls apart due to a regulatory ban or other specified reasons.
Paramount Skydance's proposal raises political questions among critics. A substantial portion of the deal's financing is being provided by Gulf sovereign wealth funds - they have pledged to put up about $24 billion to fund the deal, according to documents filed with the U.S. Securities and Exchange Commission.
Democratic Senator Elizabeth Warren called the deal "an antitrust conflagration of the highest order," NPR reports.
Of particular note is that Paramount Skydance may get CNN, a Trump-opposed television station. Paramount Skydance is owned by Larry Ellison, the son of a Trump supporter.
Film critic Anton Dolin Dolin believes that the market will judge everyone
In reality, the world, the movie business and Hollywood are now going through an era of tragic change that is broader, deeper and more powerful than the personal will of any particular manager. That said, these managers in Hollywood studios are not in a position of irremovability at all. As soon as they make some wrong decisions, and the studio begins to suffer losses, the board of directors immediately change this manager for another. And in any case, business rules everything, the market rules everything here. This is not the cinematography of some country where everything is under state control and state funding and serves this very state.
Who Warner Bros. will end up with is an open question, but 52% of 700 industry players surveyed by Bloomberg Hollywood bet on Netflix to win.
This article was AI-translated and verified by a human editor
