from Trump’s son-in-law to US antitrust laws

Netflix and Paramount enter head-to-head in the battle to take over Warner Bros. Discovery (WBD). A war that will mean, whoever wins, greater business concentration in the United States in a sector dominated by a handful of large groups that monopolize cinema, media, television and streaming and that will change the map of entertainment.

Paramount, parent company of CBS, MTV and other media companies, launched a hostile takeover bid on Monday at $30 per share in cash, which exceeds the $27.75 per share offered by Netflix just a few days before ($82.7 billion, just over €71.021 million at the current exchange rate). This offer involves valuing the company at around $108 billion, including debt. However, comparing the two offers is complicated by Warner Bros. plans to spin off CNN, TNT and Discovery Channel from its business.

Paramount’s offer, pending acceptance by WBD shareholders and US regulatory evaluations, is backed by 11.8 billion from the Ellison family (David Ellison, CEO of Paramount Skydance, is the son of Larry Ellison, the billionaire co-founder of Oracle), by Middle Eastern sovereign wealth funds and by the private firm of businessman Jared Kushner, former advisor and son-in-law of Donald Trump, he points out. Bloomberg.

It so happens that Trump himself assured on Sunday that he would have a say in the merger proposal between Netflix and Warner Bros, understanding that the market share resulting from the operation “could be a problem.” The agreement, which could reshape the entertainment industry, has to “go through a process and we will see what happens,” the US president said.

The market is divided between those who see it as a defensive move to secure content, and those who see it as a They consider a high risk in a sector with tense marginssays Javier Molina, eToro Markets Analyst. Questions about competition have also arisen in Washington. “For the investor, the signal is that the concentration continues and the large platforms are willing to take on more risk to maintain their position, something that can alter valuations and competitive dynamics,” the expert points out.

A difficult time for the big studios… and for the platforms

The battle comes at a time when major studios and platforms face pressures from production costs, audience fragmentation and a slowdown in subscriber growth. “For Netflix, the acquisition represents the opportunity to reinforce its transmedia strategy, develop broader narrative universes and consolidate its dominance in a sector that tends towards concentration,” says Antonio Di Giacomo, Senior Market Analyst at the broker XS.

However, both giants will have to navigate a complex regulatory path. The combination of Netflix with a player that operates HBO Max and has nearly 130 million global subscribers raises significant questions in terms of market concentration and competition. Scrutiny will be intense, both in the United States and Europe, to avoid a possible monopoly, especially in digital distribution, content licensing and negotiations with independent producers.

“Netflix has the reins, but there will be ups and downs before reaching the goal,” says Ross Benes, an analyst at Emarketer. In his opinion, Paramount will turn to shareholders, regulators and politicians to try to stop Netflix, so the battle could be prolonged. “Paramount would probably have an easier and faster path to obtaining antitrust clearance than Netflix, in our opinion, not only because of the more limited antitrust problems, but also because of the apparent support of the administration,” notes the antitrust analyst of Bloomberg Intelligence, Jennifer Rie.

To his statement the expert adds that the combined market shares of Paramount and Warner in the streaming They would be lower than those of the agreement with Netflix. However, other analysts consulted assure that this may not be applicable to reviews in Europe and by the attorneys general of Democratic states. Faced with Netflix’s plans, Paramount’s objective is to merge two historic Hollywood studios to counteract the influence of Netflix itself, as well as Disney and Amazon.