Paramount and Netflix mobilize Wall Street and sovereign wealth funds to take control of Warner Bros.

The race to take over Warner Bros. has unleashed an unprecedented fight between giants that promises to redefine the future of Hollywood. The agreement reached by Netflix to acquire the company for $82.7 billion, including debt, was left in suspense after Paramount Skydance redoubled its efforts days later with a hostile takeover valued at about $108 billion. The objective is none other than to take control of the most strategic asset on the market to strengthen their domains in film, streaming and television, but the path they have taken to achieve this has been very different.

Netflix, for its part, has chosen to build its offer with a huge package of debt backed by some of the most important banks on Wall Street. According to recent communications compiled by BloombergWells Fargo, BNP Paribas and HSBC will provide a $59 billion unsecured bridge loanone of the largest in history, to cover the bulk of the cost of the agreement. This type of loan is temporary and is typically replaced with more permanent debt, such as corporate bonds, a common strategy for large-scale financings. The agreement contemplates that Warner Bros. shareholders receive $27.75 per share (23.82 euros), divided between cash and Netflix common shares.

In parallel, the offer of the group led by David Ellison is backed by a trio of Middle Eastern funds – the Public Investment Fund of Saudi Arabia (PIF) and the Qatar Investment Authority (QIA) and the relatively unknown Abu Dhabi firm L’imad Holding– who have agreed to contribute 24 billion dollars. The funds are overseen by powerful Gulf states that have long provided large amounts of capital to global leveraged buyout firms.

An example is Apollo Global Management Inc.which is among the firms that provide up to 54 billion dollars of financing for the offer for Paramount. Mubadala InvestmentAbu Dhabi, has a long-standing relationship with Apollo, and PIF’s venture capital arm has invested in funds managed by the US firm.

The Saudi sovereign fund, together with the QIA and Lunateof Abu Dhabi, has also directed billions of dollars to Affinity Partnersthe private investment firm of Jared Kushner, former advisor and son-in-law of Donald Trump, who returns to the scene with a decisive role in this operation. Kushner’s firm also has ties to Mubadala, after co-investing in a Brazil-based fast food company, alongside a unit of the Emirati entity.

Paramount’s offer amounts to $30 per share in cash, beating the $27.75 offered by Netflixwhich, for its part, has stated that it is “super confident” in closing the previously agreed upon agreement. However, the future of the operation now depends on WBD shareholders and US regulatory assessments.

What do analysts predict?

The shareholders would have an approximate period until January 8, 2026 to decide on Paramount’s offer, which, if it manages to prevail, would consolidate a more integrated audiovisual conglomerate, combining production, streaming, cable channels and news, increasing its market power. But if Netflix maintains its agreement, it would reinforce its leadership in streaming, integrating historical Warner franchises although without including cable channels.

Analysts point out that the dispute over Warner could reduce the fragmentation of the sector: Jessica Reif Ehrlich, of Bank of America Securities, assures that “the media industry needs to consolidate” in the face of pressure from “ever larger” streaming platforms. Meanwhile, Ross Benes, of Insider Intelligence, states that a merger between studios and streaming services “could benefit the advertising sector by centralizing inventory and simplifying the relationship with advertisers,” although it could also reduce rivalry between large players in the market.