According to CNBC, in September 2024, Paramount and Skydance CEO David Ellison sent a letter to the Warner Bros. Discovery board proposing a merger, kicking off a formal sale process. That process drew in Comcast and Netflix as potential bidders, ultimately doubling the value of WBD shares. On a recent Friday, Netflix announced a deal to acquire the HBO Max streaming service and the Warner Bros. film studio for $27.75 per share, an equity value of $72 billion. As part of the deal, WBD will separate its pay-TV networks like CNN and TNT before closing. The outcome leaves Paramount, which started the whole bidding war, without the assets it sought, while massively enriching WBD CEO David Zaslav and shareholders. Netflix co-CEO Ted Sarandos noted the assets weren’t properly “cleaned up” for sale before this process began.
The Unintended Consequences
Here’s the thing about kicking over a hornet’s nest: you rarely control where the hornets go. David Ellison’s play for Warner Bros. Discovery was a classic corporate power move, but it had a result he absolutely did not want. He basically handed his biggest competitor, Netflix, the keys to a massive content kingdom. Think about it. Netflix, already the dominant streamer, now gets HBO’s prestige brand, its deep library, and the entire Warner Bros. film studio machinery. That’s not just strengthening Netflix; it’s a catastrophic blow to the competitive positioning of everyone else, especially Paramount and Comcast’s NBCUniversal.
Zaslav’s Masterclass
So who’s the real winner here? Look no further than David Zaslav. Ellison’s unsolicited interest forced WBD’s board to run a proper auction, and Zaslav played it perfectly. He didn’t just sell; he engineered a separation. By agreeing to spin off the linear TV networks (CNN, TNT Sports) first, he made the streaming and studio package a cleaner, more attractive asset. That’s why Netflix was willing to pay a premium. Zaslav turned a company that was struggling with debt and streaming losses into a $72 billion payday for his shareholders. Not a bad few months’ work, all triggered by a rival’s ambition.
What Now For Paramount?
This leaves Ellison and Paramount in a really tough spot. They gained control of Paramount just months ago, and their first major strategic gambit has essentially backfired. They wanted to get bigger to compete with Netflix and Disney. Instead, they made Netflix way bigger and took a prime merger target off the board. The pressure is now immense. Do they try to merge with NBCUniversal, which brings its own huge baggage? Do they go it alone in a market where scale is everything? They started a fire, and now they’re the ones getting burned. It’s a stark lesson in how quickly corporate chess can go sideways.
