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Warner Bros Discovery has begun exclusive talks with Netflix for a sale of the legendary Hollywood group’s streaming and studio businesses, according to sources familiar with the auction.
Netflix, Paramount and Comcast have spent the past week scrambling to convince the board — and indirectly, Washington regulators — that they offer the clearest path forward. The bidding kicked off in November, with many Hollywood observers viewing Paramount, led by David Ellison and backed by his billionaire father Larry, as the frontrunner.
But Netflix has put forward the highest offer for WBD’s studio and streaming business, according to people involved in the process.
The streaming pioneer, which has disrupted the traditional film business and drawn the ire of many in Hollywood, is attracted to Warner Bros assets including HBO and its extensive library of films and television.
Netflix has also surprised many in Hollywood by offering assurances that it would continue to allow Warner Bros films to enjoy wide cinematic releases.
However, antitrust specialists warn a Netflix deal could be difficult to approve, given it would combine two of the top US streaming platforms.
People close to the Trump administration’s regulatory officials have privately echoed that concern.
Netflix’s bid continues to face rising resistance inside Hollywood. James Cameron, the famed director of Titanic, The Terminator and the Avatar series, warned this week that selling Warner Bros to the streaming giant would trigger “a catastrophic loss of long-term value” for the industry. Other top talent have expressed similar unease, according to people familiar with the conversations.
Despite those tensions, WBD chief executive David Zaslav favours a merger with Netflix, partly because he would retain operational independence, a crucial consideration as he seeks to preserve his influence in Hollywood, according to people briefed about the matter.
Paramount has made a slightly lower offer for WBD, according to people familiar with the matter. However, the group stunned rivals by committing to pay WBD a $5bn termination fee if the deal is agreed but not completed — a move that reflects its confidence that its bid could clear regulators swiftly.
People close to the Trump administration say the US president prefers a Paramount merger, as he likes the idea of CNN, now owned by WBD, and Paramount-owned CBS being controlled by the Ellisons.
Still, a Paramount takeover presents complications for Zaslav. Paramount has offered the WBD leader a co-chief executive role in the newly formed company, a role he does not find attractive, according to people familiar with the matter. Netflix would allow him to retain sole control of the Warner studio. But people briefed on the matter say the WBD board is not chiefly concerned with Zaslav’s future.
Comcast, meanwhile, is seen as slipping out of contention, though people close to the company insist it remains “very much in the mix”. They argue that the regulatory case for a Comcast-Warner Bros combination is cleaner than portrayed and reject the idea that Trump could sink the deal out of personal animus.
Bloomberg first reported that Netflix was in exclusive talks with WBD.
Ellison began pursuing WBD only weeks after closing an $8bn acquisition of Paramount this year, as he makes an ambitious push to build a Hollywood empire with the backing of his father, one of the wealthiest people in the world.
Acquiring WBD — which owns the movie studio, HBO and franchises including Harry Potter, DC Comics and Batman — would help Paramount compete against larger rivals such as Netflix and Amazon.
Any deal would dramatically reshape Hollywood, which has suffered thousands of lay-offs in recent years.
WBD and Paramount did not respond to requests for comment. Netflix and Comcast declined to comment.