Netflix appears to be the bidder of choice in the war for Warner Bros. Discovery.
According to multiple reports late Thursday night, WBD has entered into exclusive negotiations to sell its streaming and studios division to Netflix, apparently spurning Paramount and Comcast. The streaming company made a mostly cash bid of $28 per share for WBD, which “appears to be the highest” offer, per Dominic Patten and Jill Goldsmith of Deadline.
A deal between the sides is now set to be announced “imminently,” according to Lauren Thomas and Joe Flint of The Wall Street Journal.
Netflix, like Comcast, had not bid on the linear cable networks — including the TNT Sports networks TNT, TBS and truTV — that WBD plans to spin off into an independent company.
There had been indications of late that WBD was leaning in the direction of Netflix, and earlier this week, Paramount sent multiple letters to the company stating its opposition — accusing WBD of pursuing a “predetermined outcome that favors a single bidder” and casting doubt on the chances that a deal with Netflix will survive antitrust scrutiny.
An agreement is only step one of a process that will include regulatory review both in and outside of the United States. Netflix would acquire one of the largest competing streamers in HBO Max, but antitrust scrutiny of the streaming business is relatively untested terrain. To begin with, it is not clear how free services like YouTube — easily the largest online video service — would factor into any analysis.
As for TNT Sports, a Netflix deal would leave the division in an uncertain position. It would continue to exist as an independent entity — as opposed to presumably combining with CBS Sports in a deal with Paramount — but existing within a far smaller and more vulnerable parent company, akin to the new USA Sports division at Versant.
That is a survivable position in the short term, but it remains to be seen whether a sports division can hold onto major league rights without the resources of one of the major media conglomerates. TNT Sports, which has already lost its flagship NBA package, would be at greater risk of losing its rights to the NHL and Major League Baseball, both of which are up in 2028.
For Paramount, falling short in the WBD pursuit would be a bitter pill to swallow. It was Paramount that initiated the process with repeated unsolicited bids for the company. And while the primary motivation for its pursuit of the cable networks was likely to acquire CNN, pairing CBS with TNT Sports would give the company significantly more sports rights at a time when most properties are locked up for the near term.
There is presumably nothing stopping Paramount from making a play for the cable networks once they are spun off, but a deal to acquire struggling linear properties — and most of WBD’s debt — seems like it would be hard to justify without the mitigating presence of the streaming and studios divisions.