The Journal. - Inside the Nasty Fight to Take Over Hollywood

Episode Date: March 5, 2026

After a months-long bidding war, Paramount Skydance has secured a deal to acquire Warner Bros. Discovery, snatching the media giant away from Netflix. WSJ’s Joe Flint breaks down how Paramount CEO David Ellison pulled off the $81 billion takeover and what this debt-heavy merger means for the future of entertainment and news. Jessica Mendoza hosts. Further Listening: - The Man Who Wants Netflix to Save Hollywood  - She Swore Off Legacy Media. Now She's Running CBS News. Sign up for WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

One of the biggest dramas in Hollywood in the past year has been the fight over Warner Brothers Discovery. Warner Brothers Discovery announced today that it is putting itself up for sale. Paramount made three bids to buy the company over the past couple of weeks here. It first offered $19, then raised that to $22. Warner Brothers Discovery has entered exclusive negotiations to sell its film and TV studios and HBO Max streaming service to Netflix. In December, Warner announced that it had accepted Netflix's offer of $72 billion. The Warner Brothers bidding saga seemed to finally come to an end. Only Paramount still refused to take no-for-an answer.

Tonight, a plot twist in a Hollywood blockbuster deal. Paramount Skydance is challenging Netflix with their own offer to purchase. Our colleague Joe Flint has been following the whole story. Netflix had a deal with Warner, but Paramount, refused to throw in the towel. And they kept coming back with more offers. And even though none of these offers they were making were really moving the needle for Warner,

they were making offers, they were lobbying lawmakers to argue against Netflix. They clearly were not going down without a fight. And finally, last week, they made an offer to borrow from a Paramount Classic an offer that Warner couldn't refuse. That offer was the ninth one from Paramount Skydance's CEO David Ellison. What does this tell you about how important this deal was to Paramount?

This deal is almost, one could say, was a make or break for the whole Ellison strategy. And they felt that Paramount on its own didn't have the size and scale to compete with a Netflix, a Disney, all these other bigger players in the streaming wars. But if they could get Warner as well, and the Warner Library and HBO Max and the cable networks. Paramount felt they really needed Warner to have a strong hand to go up against a Disney and a Netflix. So they really did need to have this. Welcome to The Journal, our show about money, business, and power.

I'm Jessica Mendoza. It's Thursday, March 5th. Coming up on the show, how Paramount managed to snatch a last-minute vote, victory in the fight for Warner Brothers. This episode is brought to you by Volkswagen. Want to go electric without sacrificing fun? The Volkswagen ID4 is all-electric and thoughtfully designed to elevate your modern lifestyle. It's fun to drive with instant acceleration that makes city streets feel like open roads.

Plus, a refined interior with innovative technology always at your fingertips. The all-electric ID4. You deserve more fun. Visit vw.c.c.ca to learn more. This episode is brought to you by Volkswagen. Need a vehicle that isn't afraid to make a splash? That's the Volkswagen Taos. Capable and confident. It's fit for everyday life.

Nimble in traffic, agile and tight spots, and still spacious enough for weekend getaways. While available, 4-motion all-wheel drive gives confidence in rain and snow. The capable Taos. You deserve more confidence. Visit vw.ca to learn more. If this were a reality dating show, Warner Brothers would have been The Bachelor, and Paramount and Netflix were the final two. And the main reason these two companies were so interested in acquiring Warner was its iconic catalog.

If you think about the library they have, whether it's Superman. Superman! Harry Potter. Griffin's! Hit TV shows, friends. I'm not great at the advice. Can I interest you in a sarcastic comment? Tons of shows, all these things which are vital to a streaming platform.

For all the original programming Netflix puts on, one of the big things that they have, of course, are those old shows. These shows that have hundreds of episodes are incredibly valuable to these streaming services who are all trying to reduce churn. They're trying to keep customers from buying it and then dropping it after their favorite show goes off the air. So the more content you have there, the more movies, TV shows, other stuff, the more likely you're willing to stick with this service. As for Netflix, the company's strategy had always been build, not buy.

But it did see a lot of upside in acquiring Warner Studios and HBO. Netflix saw an opportunity. They recognized also the value of that library and the HBO. Again, they weren't interested in the cable network business, but they were interested in that. And Warner felt that Netflix was a better steward for those assets. And there was also concern from Warner Brothers about Paramount's ability to finance the deal. Paramount already had $14 billion in debt. So Warner was skeptical that Paramount made sense as a buyer.

So there were concerns, like, okay, you know, how are you going to pay for this? You've got a ton of debt. You're a smaller company than we are. So those were some of the reasons there was animosity between the two. And it was bad. I mean, we've written stories about Paramount basically sending letters saying they felt this process was being tilted to Netflix, and they weren't getting a fair shape. But for all that, Paramount wasn't giving up.

In December, after Netflix and Warner seemed to have struck a deal, Paramount made one more bid to take over the company, offering nearly 70, billion dollars. Then Paramount CEO David Ellison turned to his allies in Washington. Just days after making that offer, Ellison sat in President Trump's box at an event at the Kennedy Center. And Paramount's chief legal officer oversaw a lobbying campaign that encouraged Republican lawmakers and administration officials to question Netflix's bid. They were very aggressive from the get-go. They clearly had a strategy not only of bidding for these assets, but of making sure that whoever they were going up against would face a very tough time in Washington. And the Allison's have connections with the Trump White House, and Trump

made clear certainly that he had doubts about Netflix's size and that it would face a tough review. And he didn't really express those same concerns about Paramount. Netflix, on the other hand, didn't have those connections in D.C. At a Senate hearing about the merger last month, the company struggled to win over lawmakers from both parties. Here's Republican Senator Mike Lee, questioning Netflix co-CEO Ted Sarandos. Mr. Serendos, we'll start with you. And please begin with your opening statement. Thank you, Chairman Lee.

Ranking Member Booker. They've built a giant streaming business and become this giant player. And basically, A, avoided scrutiny from Washington lawmakers, and B, because they haven't done big deals before, they haven't had to parade themselves in front. By that point, in February, Paramount had increased its bid to $81 billion. This even included a nearly $3 billion breakup fee that Paramount would pay to Netflix. And Paramount would also pay Warner $7 billion if regulators don't approve the deal.

Netflix declined to manage. match the bid. Warner Brothers CEO David Zazlov said that once the company board votes to adopt the Paramount merger, quote, it will create tremendous value for our shareholders. On Thursday, the 26th was when the Warner Board came out and said that Paramount's offer for the entire company was superior to Netflix's bid for just the studios and HBO Mac streaming service. And that's how we got here right now. Netflix's co-CEO's CEOs said, quote, This transaction was always a nice to have at the right price, not a must-have at any price.

Is this it? It's a done deal now? Netflix isn't going to come back with some last, last, last-minute comeback offer in the next few days. I don't think that's going to happen. Done deal, though, we don't know yet, because there does still have to be a regulatory process here. So we'll see what happens. But, yeah, no, Netflix is pretty sure they're officially out of it now.

So, and their shareholders have been rejoicing because we've seen their stock shoot up once it was clear they weren't going to stay in the chase for Warner. After the break, what a paramount Warner Brothers merger could mean for the entertainment industry and consumers. One plus one equals more of the greatest stories. Hulu on Disney Plus. Stories about survivors. The most dangerous planet. Family, retribution, murder, prophecy. Beer and propane.

The ultimate soldier. The best of the best stories now with even more from Hulu. Amazing. Have it all with 3-1 Disney Plus. The Warner Brothers Paramount merger could create a media behemoth. In addition to its Hollywood studios, Warner Brothers Discovery controls a massive film archive, HBO Max, and TV networks, including CNN. Paramount Skydance owns Paramount Pictures,

cable channels like Comedy Central and Nickelodeon, and CBS, both news and sports. So if this merger between Paramount and Warner Brothers actually happens, what would that look like? Starting with streaming services, for example. Well, Paramount has already said they're going to combine the streaming services. Now, let's be clear by what we mean by combine. What it really means for now until we get more clarity

is certainly they're going to combine a lot of the operations of the two streaming services. You know, obviously there's going to be a lot of crossover. in tech and other business jobs there that will be reduced. They've also said we're going to protect HBO. We're going to let HBO be HBO. And, you know, they also have more sports now. Assuming the deal goes through, TNT, Warner's T&T, they have March Madness, they have some college football, they have some baseball.

It's very complimentary to CBS sports, which has the NFL. Joe, I also want to ask about the news outlets. I mean, Paramount's already making significant changes at CBS. and now they could also own CNN? Well, that's getting a lot of attention, certainly in media circles, what this deal will mean for CNN. When the Ellisons were first pitching the deal

to the White House, we reported that they promised sweeping changes at CNN. We don't know what sweeping changes means, so there's a lot of unrest at CNN the last few days. President Trump has complained about what he calls bias and news coverage, including from CNN and CBS. David Ellison and his father, billionaire Larry Ellison, have signaled to the Trump administration that if they gained control of CNN, they would try to overhaul it.

If the deal goes through, Paramount will have a big challenge on its hands. The company stands to take on more debt than it already has, bringing its total debt load up to $79 billion. So as a condition of Paramount's deal with Warner, David's father, Larry Ellison, agreed to personally guarantee much of the purchase. The Ellison's are one of the wealthiest families in the world. Larry Ellison is the co-founder of tech company Oracle and already a player in media, since Oracle has a big stake in TikTok's U.S. operations.

Still, the deal leaves Paramount navigating a new media era with significant debt. Paramount has promised 30 movies a year, 15 from Warner, 15 from Paramount, theatrical movies. Those are expensive. Paramount's going to have, you know, $79 billion. of debt here. And they've said that, you know, none of this will affect production, but a lot of folks in Hollywood are wondering how, how can that be? How, you know, you're taking on so much debt, how is that, how are you going to be able to sustain, making 30 movies a year, marketing them, all of that, and also, you know, running all these cable networks. And it just seems

like they've bit off an awful lot. It's going to be a real challenge to bring all that to fruition at the same time having to whack away at this heavy debt load. Today on CNBC, David Ellison was asked about potential layoffs. He said, quote, we will absolutely have to rationalize the overall corporate overhead of the company, but that's not the primary driver of the synergies in the deal.

How would this deal change the landscape of entertainment if it goes through? For writers and producers and actors, these deals are always a little nerve-wracking. You know, we've got two major companies that own two major studios, major cable and streaming service networks. So if you're writers and producers, the leverage keeps shifting to the big media company.

So that's nothing that anyone in town likes who's on the creative side of the business or below the line because you just are losing more and more leverage to negotiate. No matter what, if this merger is approved, there will be one clear winner, the Ellison's. Well, the Allison family will be very powerful after this deal closes. I mean, obviously they already were, but, you know, the idea that one family is controlling or has stakes in assets as wide-ranging as CBS and CNN and HBO and Warner movies and Paramount movies and TikTok, that's an awful lot. an awful lot of clout and an awful lot of reach

and an awful lot of responsibility that comes with it. So certainly that is something that's going to, you know, keep a lot of media and tech watchdogs up late at night and lawmakers watching as well for, you know, to see how the Ellisons are managing these assets, what they are using them for, and it's going to be a very interesting next few years. That's all for today, Thursday, March 5th.

The Journal is a question. co-production of Spotify and the Wall Street Journal. Additional reporting in this episode from Jessica Tumple, Dave Michaels, and Lauren Thomas. Thanks for listening. See you tomorrow.