Netflix is mounting a last-ditch effort in Washington as momentum appears to be shifting toward David Ellison and Paramount Skydance in the $108 billion battle for Warner Bros. Discovery.
According to Deadline, events are leaning toward Paramount prevailing in its hostile takeover bid.
Eleven Republican state attorneys general have also urged the DOJ to block the Netflix-WBD merger.
At the same time, Netflix co-CEO Ted Sarandos is personally heading to D.C. in what is said to be a “last-ditch” effort to save his company’s merger with WBD as antitrust concerns intensify.
Update: Netflix officially walks away, paving the way for Paramount to win WBD.
Sarandos Heads to Washington
As first reported by The New York Post, Sarandos and Netflix’s expanding team of lobbyists have launched what’s described as a government “charm offensive” this week. The effort reportedly includes meetings with lawmakers and possibly even President Donald Trump.
Sarandos is scheduled to appear at the White House on Thursday. It remains unclear whether he will meet directly with Trump. The two previously met in November.
Antitrust Concerns Take Center Stage
At issue is Netflix’s plan to layer Warner Bros. Discovery’s streaming service over its own platform, effectively combining the No. 1 and No. 3 streamers under one roof along with WBD’s studio operations.
Regulators are examining whether the merger would substantially lessen competition in the Subscription Video on Demand market. Critics argue the deal could reduce consumer choice and increase pricing power.
Political Headwinds Grow
The deal also faces political resistance.
Some GOP lawmakers have expressed concern that Netflix programming skews left and are hesitant to grant the company additional market power.
Complicating matters is Netflix board member Susan Rice, the former Obama national security adviser. Rice recently criticized Trump on a podcast and warned that corporations that “take a knee” to the administration could be “held accountable” if Democrats return to power.
Trump responded publicly, calling on Sarandos to either remove Rice from the board or “pay the consequences.”
Paramount’s Momentum Builds
While Netflix works to contain regulatory and political fallout, Paramount Skydance’s $31 per share all-cash offer is gaining traction.
The Warner Bros. Discovery board has already determined that the revised proposal could reasonably lead to a “Company Superior Proposal” under its agreement with Netflix.
With regulators scrutinizing the Netflix deal and political tensions rising, the coming days could determine whether Sarandos can stabilize the merger, or whether David Ellison’s bid ultimately prevails.
