The Warner Bros Sale May Take Months or Years to Sort Out

Warner Bros. officially put itself up for sale only a few months ago, and bids came in like wildfire. It's hard to believe that less than 60 days ago it seemed like we'd have a pause in Hollywood's consolidation, but that was never going to happen.

After Netflix emerged as the winner, again, I thought there may be a settling of the wars, but Paramount mounted its own hostile takeover, and now we sit in choppy seas as Hollywood tries to figure out who gets to own one of the greatest movie studios to ever exist.

Let's dive in.

How Long Will the WB Deal Take?

Consolidation in Hollywood is inevitable, but the thing that shakes the industry up the most is uncertainty. And with everyone watching this situation unfold, I have found that many execs feel paralyzed by the news and therefore don't work to develop or buy at a rate that would be beneficial to writers and directors.

And now Bloomberg says this could take months.

This slowdown has happened before, when Skydance bought Paramount this year, and it took away the 'survive till '25' mentality and shifted to more waiting, and a "stay in them ix til '26" slogan that just felt like kicking a can down the road.

And now, the bidding for Warner Bros. is expected to last at least months. There are multiple people involved in the process, bids to be sorted through, and then government programs that have to review and sign off.

Why Is It Taking So Long?

The reason things like this take so long is that WB has to legally review each offer and pick the most beneficial one for its shareholders; otherwise, the shareholders can sue.

They use a board to do that. The board voted for Netflix, but now, with Paramount Skydance offering more money per share than Netflix, the board has to review that offer.

What's most likely to happen is that Netflix ups its offer to $30 a share, which is exactly what Paramount is offering.

Paramount can sue, or offer even more money to see if WBD bites on that.

Basically, we're still at the very beginning of this saga.

The WBD board had already approved the Netflix deal. To cancel that agreement and pursue the Paramount offer, WBD would be forced to pay Netflix a $2.8 billion termination fee.

This means the WBD board is not expected to simply cancel the Netflix merger, placing the burden on Paramount to aggressively pursue its offer directly with shareholders.

The initial Netflix deal was already expected to take 12 to 18 months to close due to regulatory hurdles and the spin-off of WBD's cable networks.

Paramount, despite launching a hostile bid, claims its all-cash offer could close in a shorter timeframe of 10 to 12 months.

But 24 months is always on the table with how these things move.

Who is Going to Win?

I think conventional wisdom probably signals that Netflix will win, since they can match Paramount's offer, and their deal was already agreed on with the board.

But there's real concern that the government will reject this as a monopoly on streaming for Netflix, which may trigger this all over again.

Ellison might win the Paramount battle, but a Paramount+WBD combo would be drowning in debt. They'd have to find foreign investors in their company, which they likely can do, and they're saddled with a ton of dying cable channels that aren't worth much if they sold them off.

In a nuclear scenario, Paramount could become so burdened by debt that Netflix just comes in and buys them after a time.

Summing It All Up

The ultimate outcome of all of this will fundamentally reshape the media landscape for years to come.

There's no way around that; we're looking at a new Hollywood.

The delay is a sustained period of uncertainty for thousands of employees and the entire Hollywood ecosystem, especially theatrical distributors concerned about further consolidation.

Hopefully, they all find time to work to keep this thing going.

Let me know what you think in the comments.