Netflix vs. Paramount: Part…we’ve lost count

Much like Paramount’s own Mission: Impossible franchise, the battle over Warner Bros. Discovery somehow is still not over—long after the saga probably should have wrapped up.

Paramount Skydance officially increased its offer for Warner Bros. Discovery to $31 per share earlier this week, in addition to promising a “$7 billion regulatory termination fee” if the transaction is blocked by regulators. That was good enough that Warner Bros. decided to keep talks with Paramount going, despite previously rejecting its offer.

Enter the other key player in this tale: Netflix, which made a deal with Warner in December to buy its streaming and studios business. You might think that a competitor’s strong counteroffer would be a headwind for Netflix—but actually, shareholders are cheering the news that the streamer might walk away from the deal altogether.

The reason is that this acquisition would be expensive for Netflix, and would require taking on debt—a prospect that shareholders were none too thrilled about. In fact, some experts think the real winner of this battle is whoever loses, given both companies will likely overpay for WBD.

The side plot

Amid all of this backroom dealmaking, earnings season has arrived. This moment gives investors a chance to rate each company’s performance while they’re wheeling and dealing:

• Warner Bros. Discovery, the legacy giant everyone is fighting for, disclosed a wider-than-expected loss when it reported Q4 earnings today, largely due to losses in its cable TV business. Revenue also fell 6% year over year. Shares sank 0.35% today.
• Yesterday, Paramount Skydance also gave investors lukewarm news about its Q4: The company reported that, while its direct-to-consumer revenue jumped 10% year over year, its TV media revenue fell 5% over the same period. But shares of Paramount rose 10.04% today, partially due to its good news about streaming sales growth, and partially thanks to its potential new deal for Warner.

With this much action, it’s only a matter of time until we get the cinematic adaption of this boardroom drama.—LB