As if the race over storied entertainment conglomerate Warner Bros. Discovery wasn’t already cinematic enough, we just got a juicy plot twist.

Last Friday, Warner Bros. announced that Netflix had won the bidding war over parts of the company, including its film studio and HBO Max, in a deal that values WBD at roughly $27.75 per share. $23.25 of that would be paid to shareholders in cash, while the other $4.50 would be in stock. The end, roll credits.

But shareholders had more drama in store: Paramount Skydance has made a direct, hostile cash offer to Warner Bros. Discovery investors to undermine the Netflix deal. Rather than buy the company piecemeal, Paramount’s offering to acquire the entirety of Warner Bros. Discovery, including TV networks like CNN.

Paramount’s romcom-esque plea to woo shareholders includes $30 per share in cash, which it says is safer than Netflix’s cash-equity mix. The company also argued its deal was more likely to get regulatory approval.

“We’re here to finish what we started,” Paramount Skydance CEO David Ellison told CNBC today.

Paramount’s total offer is worth $108.4 billion, well above Netflix’s $82.7 billion bid. While the Ellison family has plenty of cash, part of the financing for the deal comes from parties in the Middle East, including Saudi Arabia’s Public Investment Fund. Another backer is Jared Kushner’s Affinity Partners.

Shares of Paramount rose 9.02% today, while Warner Bros. Discovery rose 4.45%. Netflix sunk 3.4%.

How will this saga end?

There’s a few ways that this final act could play out. For one, WBD shareholders could stay the course and just stick with the original Netflix deal, which the WBD board has already signed and recommended shareholders accept. On the other hand, if enough WBD shareholders want to take Paramount’s tender offer, Paramount could technically take over without the board’s approval.

Yet there’s a range of choose-your-own-adventure ways this story could wrap up: The bidding war could push Netflix to make an even sweeter deal, or other suitors could even re-emerge to hijack the plotline.

Don’t forget about regulators: Antitrust authorities could strike down the Netflix deal, given it would create a gargantuan media conglomerate. It’s not just Hollywood that is pissed about the Netflix-Warner Bros. merger—even President Trump signaled that the merger would have to hold up to some serious scrutiny, saying over the weekend, “It is a big market share. It could be a problem.”

And while the Paramount deal has some direct ties to the Trump family via the president’s friendship with Larry Ellison, Semafor reported that Paramount’s strategy to cozy up to the White House is backfiring.

If there’s one thing for sure, it’s that there’s more drama on the way. Encore, please!—LB

🟢 What’s up

• Confluent jumped 29.08% after IBM announced it would acquire the data streaming company for $11 billion, a move aimed at bolstering IBM’s AI software portfolio.
• Warby Parker popped 13.27% on the news that it will help Alphabet develop new AI-powered glasses.
• Kymera Therapeutics rose 41.55% on positive results for its KT-621 drug targeting Type 2 inflammatory diseases.
• Wave Life Sciences exploded 147.26% after early trial data showed its RNA obesity therapy reduced fat while preserving muscle.
• Structure Therapeutics gained 102.49% on promising trial results for its oral weight-loss drug, adding to a strong day for biotech names.
• Carvana climbed 12.06% as the online retailer prepares to join the S&P 500 on Dec. 22.

What’s down

• Tesla dipped 3.39% after Morgan Stanley’s Andrew Percoco initiated coverage at Hold, leaving the stock with Buy ratings from fewer than 40% of analysts.
• Lucid Group fell 4.92% after Percoco downgraded the stock to Sell, warning that the EV “hangover” could extend into 2026.
• CoreWeave slipped 2.33% on news of a $2 billion convertible bond offering.
• Fluence Energy retreated 4.59% following a downgrade from Mizuho, which argued the stock’s valuation has gotten ahead of fundamentals.
• Air Products & Chemicals edged 9.45% lower amid plans for a major partnership with Norwegian chemical company Yara International.
• Marvell Technology sank 6.99% after Benchmark downgraded the stock over the loss of Amazon’s AI chip orders.

Value Investing 101: Buy cheap assets that are worth more than the market thinks.

Maybe that’s what Strategy was doing when it spent $962.7 million on 10,624 bitcoins last week, its largest bitcoin purchase since July. At an average cost of $90,615 per bitcoin, it wasn’t a bad deal for the company that made digital asset treasuries the most fashionable investment of the year. Strategy pulled back on its weekly bitcoin purchases in November as the crypto’s value plummeted, and its latest purchase could be a sign that the company has regained confidence in its primary investment.

But investors have to wonder if this was more desperation than inspiration. Bitcoin has fallen nearly 28% since its Oct. 7 high, while Strategy is down nearly 50% since the same date. The decline prompted Cantor Fitzgerald to cut its price target for the stock by 59% last Thursday, and Strategy CEO Michael Saylor noted in a presentation last Monday that the company may have to sell some of its massive bitcoin holdings—a once unthinkable move that could inspire an even steeper selloff in both the stock and the cryptocurrency.

Is Strategy just being greedy while others are fearful, and making a smart investment? Maybe—or maybe Saylor needed to bolster the market’s confidence in both bitcoin and Strategy before the convoluted math that made Strategy’s crypto investment work in the first place completely falls apart.—MR

AI isn’t just eating compute power—it’s eating the credit markets, too.

As hyperscalers race to build data centers, lenders are enjoying a wave of demand from companies scrambling to finance the AI buildout. “The big companies have only just started dipping their toes into the credit markets…feels like there’s a lot more they can do there,” Ben Powell, chief investment strategist for APAC at BlackRock, told CNBC. 

Translation: The borrowing spree has barely begun.

Powell argued that the real winners are the “picks and shovels” players powering the AI bubble, especially energy suppliers. Global data-center growth could require an extra 90 GW of power by 2030. That’s like adding three New York Cities to the US grid, according to Apollo, with each gigawatt demanding about $50 billion in infrastructure spending.

The risk beneath the rally

But below the surface, there’s growing concern about how risk is being priced.

Some pros warn that investors are getting a little too comfortable with credit ratings. PIMCO CIO Dan Ivascyn put it bluntly: “It is very, very dangerous to assume something has an investment-grade rating just because the rating agencies assign a rating to it.” He suggests investors stop outsourcing risk assessment to third-party graders, calling today’s behavior similar to the same sort of complacency the credit market had before the Great Financial Crisis.

Those ratings may already be stretched. Ivascyn said that in many cases, a borrower earns an investment-grade label from only one agency—often a sign that the others see it as below IG.

Looking ahead

Nobody wants to look a gift horse in the mouth, and investors are encouraging private credit firms to be aggressive in order to capitalize on the AI boom. But that aggression can have a darker side, particularly if creditors are loaning money to borrowers that aren’t as financially sound as they seem.

How this all plays out ultimately hinges on the macro environment. Right now, the risk feels contained: default rates are relatively low, economic growth is strong amid heavy AI investment, and the Fed is widely expected to cut rates this week.

But if the economy weakens, things could look a lot different for the booming credit market—and the rest of the financial ecosystem.—SY

• Ed Yardeni has been a tech bull for 15 years—here’s why he’s shifting his strategy.
• Speaking of, these are the 12 ‘AI loser’ stocks that are most likely to get left in the dust during the AI revolution, according to Wedbush.
• Geico CEO Todd Combs is departing Berkshire Hathaway for a role at JPMorgan Chase.
• Direct-to-patient services are booming in the healthcare industry right now—here’s why the traditional model isn’t working anymore.
• NextEra Energy will provide Meta Platforms with 2.5 gigawatts of clean energy, and will build new data centers with Alphabet.
• Apple’s chip leader Johny Srouji clapped back at rumors that he is leaving the company.
• "OpenAI is the next Netscape,” Michael Burry said in a series of scathing social media posts over the weekend.

The economic calendar was pretty quiet today, but things start to pick up a bit tomorrow with the NFIB small business optimism index and the delayed October JOLTS reading.

All the real attention is squarely on the Federal Reserve, with the FOMC kicking off its two-day meeting to determine whether or not to cut interest rates one last time this year. CME has the odds of the Fed cutting rates at just below 90% through the end of the trading session, so confidence is high that a cut is coming—though nothing’s set in stone until Jerome Powell’s press conference on Wednesday afternoon.

Over on the earnings calendar, there are a few names worth watching: Campbell’s Co., AutoZone, GameStop, AeroVironment, and Ollie’s Bargain Outlet.