NEW YORK — The high-stakes battle for the future of Hollywood has entered a grueling new phase. Paramount Skydance, led by David Ellison, has reportedly shifted its strategy to “Plan D” in an aggressive effort to disrupt Netflix’s current agreement to acquire the core assets of Warner Bros. Discovery (WBD).
According to sources familiar with the matter, the new strategy is a “waiting game” centered on the belief that Netflix’s $82.7 billion deal will ultimately collapse under the weight of regulatory scrutiny and eroding market confidence.
From Hostile Bids to the “Long Game”
Paramount Skydance’s pivot comes after months of escalating tactics designed to sway WBD’s board and shareholders. The company’s previous strategies included:
- Plan A: A superior $30-a-share, all-cash offer for the entire company, aimed at outmatching Netflix’s $27.75 cash-and-stock proposal.
- Plan B: Launching a hostile bid directly to shareholders after the WBD board, led by David Zaslav and Samuel DiPiazza, remained committed to the Netflix merger.
- Plan C (Defcon 1): Threatening litigation against WBD, alleging that the bidding process was unfairly skewed in favor of Netflix due to the personal relationship between Zaslav and Netflix co-CEO Ted Sarandos.
“Plan D” marks a departure from active aggression to strategic patience. Insiders suggest the Ellisons and RedBird Capital’s Gerry Cardinale are now banking on the “I told you so” moment—waiting for Netflix’s financing and regulatory path to hit a dead end.
The Regulatory Wall and the “Trump Factor”
A central pillar of Plan D is the looming challenge of federal approval. Paramount insiders are highlighting the immense regulatory uncertainty Netflix faces, particularly under the current Trump administration.
There is a growing belief in the Paramount camp that federal regulators will look unfavorably on a tech giant like Netflix acquiring a historic “Big Five” studio. Conversely, the Ellisons—David and his father, Oracle co-founder Larry Ellison—have cultivated a friendly relationship with the administration, which they believe provides them a smoother path to closing.
The Netflix “Business Model” Under Scrutiny
The financial logic behind Netflix’s bid is also coming under fire. Since the bidding war began in earnest last June, Netflix has seen a staggering $160 billion loss in market cap.
Investors are reportedly growing uneasy about several factors:
- Debt Load: The deal would require Netflix to take on an estimated $60 billion in new debt, a move that critics say contradicts Netflix’s historical “builder, not buyer” philosophy.
- The “Cable Spinoff” Risk: Netflix’s deal relies on spinning off WBD’s legacy cable assets (CNN, TNT, and Discovery) into a new entity called “Discovery Global.” Paramount argues that these assets have little to no standalone value, pointing to the 30% stock drop of Versant Media (Comcast’s recent cable spinoff) as a cautionary tale.
- Stock Valuation: As Netflix’s stock continues to slide, the stock portion of its offer to WBD shareholders becomes increasingly less attractive compared to Paramount’s all-cash guarantee.
Looking Ahead
While the Warner Bros. Discovery board recently reaffirmed its commitment to Netflix, calling Paramount’s bid a “highly risky leveraged buyout,” the market remains volatile.
Paramount Skydance remains in the background, waiting for the numbers behind the Netflix deal to “evaporate.” If the Netflix stock continues its downward trend or if regulatory signals turn negative, Plan D could position the Ellisons to finally seize the keys to the Warner Bros. kingdom.
Here are the most frequently asked questions about the ongoing bidding war between Paramount Skydance and Netflix for the assets of Warner Bros. Discovery (WBD).
The Offers & Strategy
What is Paramount Skydance’s “Plan D”? After failing to convince the WBD board with higher all-cash offers (Plan A), launching a hostile takeover (Plan B), and threatening litigation (Plan C), Paramount Skydance has pivoted to a “waiting game.” Plan D involves waiting for Netflix’s financing and regulatory approval to falter. Paramount believes that as Netflix’s stock value fluctuates and regulatory hurdles mount, their all-cash bid will eventually become the only viable option.
How do the two bids compare?
- Netflix: A $82.7 billion deal (roughly $27.75 per share) consisting of cash and stock. It focuses only on the Warner Bros. studios and HBO Max, leaving WBD’s cable assets (CNN, Discovery) to be spun off.
- Paramount Skydance: A $108.4 billion all-cash bid ($30 per share) for the entirety of Warner Bros. Discovery, including all cable networks.
Why did the WBD Board reject Paramount’s bid? The board labeled Paramount’s offer a “highly risky leveraged buyout.” They expressed concerns over the $50 billion in new debt required for the deal and the potential $4.7 billion in costs WBD would incur (including a $2.8 billion breakup fee to Netflix) if they switched partners.
Regulatory & Political Climate
What role does the Trump administration play? Paramount Skydance, led by David Ellison, is reportedly banking on a “smooth” regulatory path under President Trump. Ellison has allegedly given assurances to the administration regarding “sweeping changes” to CNN if the deal goes through. Conversely, critics argue that a Netflix-Warner merger would create a streaming monopoly that could face intense antitrust scrutiny.
Will the Justice Department block the Netflix deal? The U.S. Department of Justice and the European Commission are currently reviewing the Netflix-WBD merger. Opponents, including cinema groups and rival media companies, argue the deal would give Netflix control of over a third of the U.S. streaming market, potentially leading to higher consumer prices.
Market & Financial Impact
Why is Netflix’s market cap dropping? Netflix has lost approximately $160 billion in market cap since the bidding war began. Investors are reportedly concerned about the $60 billion in debt Netflix must take on to fund the acquisition, as well as the dilutive effect of issuing new stock for the merger.
What happens to WBD’s cable channels (CNN, TNT)?
- Under the Netflix deal, these channels will be spun off into a new company called “Discovery Global” by mid-2026.
- Under the Paramount bid, these assets stay within the merged company, with Paramount planning to find “synergies” across both linear and digital platforms.