Christmas movies can be full of romance. But if you prefer a tale of billionaires fighting for control of one of the biggest names in Hollywood, this December’s unmissable drama is the Warner Bros-Discovery takeover battle.
The tussle could provide inspiration for some December portfolio diversification. After all, there’s no business like show business.
This week Paramount Skydance, the name behind the Mission Impossible and Top Gun films, launched a $108billion hostile bid for Warner Bros. Discovery – maker of the Harry Potter movies and owner of HBO, whose shows include Game Of Thrones.
The move came as a significant plot twist. Warner Bros had earlier agreed to a $82.7billion approach from Netflix, the streaming giant behind Bridgerton and Stranger Things.
Netflix is offering $27.75 a share in stock and cash. Paramount is willing to pay $30 a share – in cash.
This price, which, rumour has it, could be raised soon, reflects its eagerness to acquire Warner Bros.
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Robert Fishman, of the New York media analysts Moffett Nathanson, said: ‘Paramount genuinely needs an acquisition to compete with Netflix, Disney and Amazon, all of which have enjoyed a substantial head-start in global scale, content output and engagement.’
Since September, Warner Bros.’ shares have surged by 120 per cent to $30, spurred by the assessment that someone would find its treasure trove of content irresistible. HBO is the jewel in this crown.
Shares in Netflix are down by 22 per cent over the same period, owing to concern that it may be tempted to raise its offer, such is HBO’s pulling power.
The share price fall also reflects the cast list of personalities lobbying for Paramount’s campaign. Its chief executive is David Ellison, son of Larry – co-founder of tech titan Oracle and the world’s third-richest man.
Ellison is also a pal of Donald Trump, who has a close interest in the next owner of Warner Bros. Jared Kushner, the US President’s son-in-law, is putting up some of the finance for the bid, alongside Saudi and Qatari funds.
The excitement over the bid is a reminder that, in 2025, the focus has been on the US tech titans. Little airtime has been devoted to the seismic change in the entertainment industry.
Even our own ITV is the subject of a bid, hoping to stay alive at a time when audiences are shifting away from traditional linear television to streaming.
If you want to profit, here are the names to watch. Grab the popcorn and settle down, it could be a bumpy ride – but it will also be thrilling.
WHAT HAPPENS NEXT
An early denouement to the Warner Bros. affair is unlikely, as it will be carefully scrutinised by the US Department of Justice (DoJ). Trump may have the final word.
Ben Barringer, head of technology research at Quilter Cheviot, said: ‘We are just at the beginning. Paramount will hope that it has blown Netflix out of the water with this bid but, even if it has, any review by the DoJ is likely to result in a long process.’
Prepare for speculation about the other plans of the major players. Netflix has ‘historically been a builder, not a buyer’, as Barringer puts it, and so it could look elsewhere if it cannot have Warner Bros. There may be more takeover action in the sector.
Meanwhile, the attraction of Warner Bros. is highlighting the entertainment arms of the tech players. Amazon and Apple have streaming services, while YouTube, a division of the Google group Alphabet, has 2.7billion monthly users. This beats Netflix.
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The tech investment trust Scottish Mortgage has a stake in ByteDance, the unlisted Chinese owner of Tik Tok, which has 2billion customers – 30m of which are in the UK. This holding is one reason why I have money in this adventure-packed fund.
LOVE INTEREST, AND THE RIVALS
Nine of the analysts that follow Warner Bros. consider the shares a ‘buy’ at this elevated level, while the remaining 12 rate them worth holding.
This hints that Netflix or Paramount will be forced to up the ante, or that there will be a turnaround in events with the appearance of another bid.
Before it became an object of desire, Warner Bros. was set to tackle its debt burden by splitting off CNN and its other struggling cable channels into a separate company. Paramount would merge CNN with its news channel CBS.
Netflix has no interest in the cable operations, regarding them as old-fashioned and out-of-keeping with its (albeit former) status as a tech superstar. In 2013, Netflix was one of the era’s hot tech stocks, but in 2018 it chose to concentrate on content.
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