This week, Warner Bros.' board told shareholders to reject a $108-billion (€92-billion) hostile takeover bid from Paramount Skydance, the studio behind the "Top Gun" and "Mission: Impossible" movies.
Instead, the board is standing by its original plan: an $82.7 billion deal with Netflix. That agreement, accepted by the board in early December, would see the streaming giant buy most of Warner Bros., including its film studio and franchises ("Harry Potter," "Dune," DC Comics brands like "Superman" and "Batman") as well as premium TV network HBO, home to hit shows like "Game of Thrones" and "The White Lotus."
What Netflix is not buying are Warner Bros.' legacy cable channels, including CNN, Discovery and Cartoon Network. Those assets — along with a significant share of the company's debt — are set to be spun off into a separate business next year.
Paramount's offer, by contrast, is for all of Warner Bros., including the cable networks.
Despite Paramount's higher bid, Warner Bros.' board sees Netflix as the safer option.
That confidence is reflected in the unusually large "kill fees" attached to the deal. If Warner Bros.' shareholders reject the Netflix agreement, or if the company accepts a rival offer, Warner Bros. would have to pay Netflix $2.8 billion. If the deal is blocked by antitrust regulators or fails to win approval from Netflix shareholders, the streamer would owe Warner Bros. a $5.8 billion breakup fee.
The size of those penalties underlines how much both sides are betting on the deal going through.
Money, however, is only part of the story. Politics are playing an unusually large role in the fight for Warner Bros.
The Paramount Skydance bid is backed by sovereign wealth funds from Saudi Arabia, Qatar and Abu Dhabi, raising questions about whether US regulators would approve a deal that gives foreign governments a stake in one of America's largest media companies.
There are also concerns surrounding Paramount's owner, David Ellison, the son of Oracle founder Larry Ellison. Larry Ellison, the second-richest man in the world, is a long-time supporter of US President Donald Trump. The Ellison family trust, valued at close to $250 billion in Oracle stock, is being used as security for Paramount's Warner Bros. bid.
When Skydance acquired Paramount earlier this year, it took control of CBS and appointed conservative commentator Bari Weiss as editor-in-chief of CBS News. Critics fear a similar shift could occur at CNN — a frequent target of Trump's attacks — if Paramount succeeds in acquiring Warner Bros.
Further complicating matters, Larry Ellison's Oracle is also part of the consortium set to take over the US operations of video platform TikTok in a deal set to go through in late January.
Those political sensitivities appear to have already reshaped the deal. Jared Kushner, Trump's son-in-law and former senior adviser, pulled out of the Paramount bid amid concerns about undue political influence. Kushner's private equity firm, Affinity Partners, had been expected to contribute funding to the takeover.
Netflix's bid has also unsettled Hollywood, albeit for different reasons.
Many in the film industry worry that if the world's largest streaming platform acquires one of the world's most important movie studios, it could accelerate the decline of the traditional cinema.
Netflix has shown little love for movie theaters, preferring to release its films online, with only brief alibi theatrical runs. It recently followed that model with the George Clooney film "Jay Kelly."
Netflix co-CEO Ted Sarandos has been on a charm offensive, promising movie lovers that after the takeover, they will "continue to release Warner Bros. studio movies in theaters," but not everyone is convinced.
For Netflix, Warner Bros. represents something the company has struggled to build on its own: a deep catalog of globally recognized franchises. Despite spending billions on original films and series, Netflix has struggled to create the kind of enduring franchises, the entertainment brands, that can be endlessly rebooted, remade and spun off, turned into merchandising and amusement park rides.
With Warner Bros., Netflix would acquire that legacy in a single deal.
The outcome, however, is not yet decided. Warner Bros.' shareholders — not the board — will have the final say, and they could still opt for Paramount's higher offer. Ellison could also raise his bid further to sway the vote.
Even if back Netflix, the deal must still clear antitrust hurdles in both the United States and Europe. In Washington, a Trump administration could pressure regulators to block the takeover. In Brussels, the European Commission may object to a deal that further strengthens Netflix's already dominant position in the streaming market.
The fight for Warner Bros. has unfolded with the twists of a Hollywood thriller.
Until the final reel, we won't know how this story ends.
