The news: After Netflix won the bidding war and Paramount pushed forward with a hostile bid, a new possibility is emerging for the fate of Warner Bros. Discovery (WBD). The Information reports a possible compromise between Netflix and Paramount, where Netflix would acquire WBD’s studio assets and Paramount would be in charge of its HBO Max streaming service and cable networks.

• This outcome would potentially solve antitrust concerns swirling around both cases—concerns that are especially relevant for Netflix, which is already a streaming giant.
• The Information’s rationale is that Netflix, as a leader in subscription streaming, doesn’t need HBO Max to build its dominance—but does lag behind in studio operations. Meanwhile, Paramount’s studio business is much more established, but its streaming service Paramount+ lags behind leading platforms.

EMARKETER’s take: While a compromise between Netflix and Paramount could address key issues both acquisitions face, the probability that the two opponents will come to a resolution remains unlikely—at least for now.

• Netflix’s takeover remains the most likely, if not the most ideal for audiences and advertisers. It’s the only offer WBD has shown willingness to accept; WBD already rejected a bid from Paramount, suggesting Netflix is its top choice.
• But Paramount has stronger backing in Washington that could give it an advantage if regulators block Netflix’s bid. Without further indication that Netflix and Paramount are willing to compromise, Paramount is the obvious backup choice for WBD—and has stronger support from the White House given CEO David Ellison’s close relationship with President Donald Trump.