The fight for Warner Bros.

A Hollywood-worthy drama is unfolding around Warner Bros. and who will buy it. Last week, Netflix swooped in with a cash-and-stock offer of $27.75 per share — but only for WB’s crown jewels: the Hollywood studios, HBO, and streaming businesses. Netflix wants one thing: premium, abundant content from the legacy Warner Bros. studios. Period.

Apparently, the threat of a WB-armed Netflix was too strong for Paramount to ignore. Its legacy business is already under pressure from the rapid growth of streaming, dominated by Netflix. Paramount Skydance shares fell 9% on Friday, after the Netflix offer was announced.

Faced with limited options, Paramount stepped up yesterday with a $30-per-share bid for the entire WB company — studios, streaming, HBO, and the cable channels, including CNN and TNT.

At first glance, Paramount’s offer seems higher. But when you consider the cable business — which would be spun off and valued separately — the comparison is not straightforward. Paramount’s CEO argues that the spin-off is worth around $1 billion for WB investors, while Bloomberg Intelligence estimates $4 billion — which would make Netflix’s offer more attractive. Analysts suggest Netflix’s offer could remain superior unless Paramount pushes its bid to $33 per share, especially given the declining cable-TV trend.

From a shareholder perspective, Paramount’s all-cash, full-entity offer removes valuation uncertainty for the cable assets. On the other hand, a WB-Paramount merger could generate more synergies, potentially around $6 billion in cost savings versus $2.5 billion for Netflix.

But Netflix is not seeking cost savings — it is seeking content, while Paramount is fighting for survival in the streaming arena. Netflix has the deep pockets to increase its bid and simplify the transaction.

From a political, anti-trust perspective: the deal is far from done — further complicated by political connections, with Trump close to the Ellisons (Paramount’s owners) and Jared Kushner involved in Paramount’s financing. This could reduce anti-trust hurdles for Paramount, making a WB-Paramount merger politically easier than Netflix-WB.

From a media landscape perspective, a Netflix-WB deal would create a more formidable competitor than Paramount acquiring WB (giving weight to anti-trust concerns).

From a market perspective: Netflix investors are less enthusiastic about WB than Paramount shareholders. A Netflix-WB deal would shift the company away from its lean, high-margin streaming business toward a capital-intensive operation, with expensive content and legacy obligations. Funding the acquisition would require over $10 billion in WBD debt plus potentially tens of billions more, meaning Netflix’s previously clean balance sheet becomes heavily leveraged. For Paramount, getting bigger means better chance for survival.

Meanwhile, WB investors are enjoying the bidding war — with WBD stock closing around $27 per share yesterday compared to a dip below $7bn in summer 2024.

In other crunchy deal news, IBM announced its acquisition of Confluent, a data-streaming company, adding it to IBM’s software portfolio. Confluent enables IBM’s AI tools to analyze and act on real-time data, creating value across industries: inventory management, smart cities, financial transactions, traffic optimization, patient monitoring – you name it. Data is the most valuavle commodity of the AI era, and software now accounts for nearly half of IBM’s revenue, making this acquisition strategically meaningful.

However, the market reacted cautiously, as the deal does not improve IBM’s leverage, and investors are waiting to see returns before pushing AI valuations higher, which already reflect significant upside potential.

Speaking of AI, Nvidia received approval under the Trump administration to sell its H200 chips in China, in exchange for a 25% revenue share. Investors reacted positively, sending the stock toward its 50-day moving average. Yet significant hurdles remain: China has domestic competitors (Huawei, Cambricon, SMIC, and Moore Threads) and government backing. State-owned companies are already barred from buying Nvidia chips – and others may be pointed if they do so. The approval alone may have limited impact on Nvidia’s business in China unless it can export other chip lines like Blackwell or Rubin, that would – maybe – be worth taking the risk to get involved with a US company, that has to pour a quarter of the revenue directly to the US government,

Away from corporate affairs, the FOMC begins its two-day meeting today – also politically pressured to cut rates. A 25-basis-point cut is broadly expected – and priced in, but diverging opinions on the next steps and ongoing activity in sovereign bonds suggest that markets may not immediately react with lower yields — so caution reigns.