We All Realize $108 Billion Is Absurd Right?

What the absolute hell is this offer? So Netflix won the bidding war for Warner Bros. with a bid of $82 billion and now Paramount is leading an attempt at a hostile takeover with a bid of $108 billion, $24 billion of which is coming from foreign sovereign wealth funds. Netflix's $82 billion bid is just for Warner Bros. and HBO, while Paramount's latest bid is for the entire company, including the assets operated by Discovery.

For a frame of reference, Microsoft paid $69 billion for Activision, and Disney paid $52 billion for Fox. I get that this was two years ago and six years ago respectively, but come on, the IP owned by WB is not worth anywhere near that much.

Netflix had to go high because they had to beat the presumptive frontrunner (Paramount), which was going to pull out all the stops to acquire the company in furtherance of its monopolistic goals through control of sports contracts and turn CNN into a conservative mouthpiece. The absurdity of this situation is that Paramount seems hellbent on also getting the underlying WB intellectual property and franchises, which they really don't necessarily need.

Paramount isn't exactly competitive on the franchise front in modern Hollywood. They just lost Taylor Sheridan to Universal, which leaves a massive hole on the streaming side of things, and their most profitable franchises in recent history (Transformers, Star Trek, Teenage Mutant Ninja Turtles) have all either slowed, stalled out theatrically, or have been stuck in development hell. There is an appeal to DC, Harry Potter, or Game of Thrones, but they don't necessarily need to pay through the nose to this degree to get IP.

If Paramount wanted to stay competitive on that front, all they really had to do was go out and option more video games and books, both of which are thriving wells to pull existing audiences to theaters. The smart move for what they are trying to do, namely assert their will over cable providers through sports contracts and own CNN, would be to let WB go and then do this hostile takeover on the remaining Discovery assets once WB has been divested, before Disney or Versant makes a play.

If I were an investor in Paramount Skydance, I'd be very skeptical about when this money would be recouped. At the time of the WB and Discovery merger, Warner Bros. was acquired for approximately $44 billion, and Discovery was worth about $23 billion. Since the companies have merged, has the newly formed WB/Discovery added almost $20 billion worth of value ($44 billion including the foreign investment). I'd argue not.

What we have seen is a system dissolution of the value of the more storied brands at Warner Bros., some at the fault of Discovery, some predating it. The Fantastic Beasts series smacked head first into a wall, causing them to do an HBOMax series basically just retelling the original eight movies. Game of Thrones is on its second spin-off already, the first of which will be in its third season in six years when it debuts. That's not even to mention the rebranding of HBOMax to Max, merging the Discovery content into Max without allowing easier access to either without making it into a giant mess, and then re-rebranding back to HBOMax, all of which diluted the value of their streaming app.

None of that also mentions the eroded consumer confidence from the fact that shows and movies typically that would be found on a studio's proprietary streaming service are not there, since they license out to other companies which further muddies already muddied waters of what streams where. It also does not take into consideration the eroded confidence from the people who make the shows and movies for Warner Bros. because even after something is done the movie can be dumped on streaming, even if it was meant for a theatrical release, cancelled at any point during production, or even pulled from streaming to essentially be lost media even after it has been released.

It also doesn't take into consideration that HBOMax/Max/HBOMax entered the merger with Discovery as the exclusive streaming home of Sesame Street, the original Looney Tunes catalog, and the back catalog of Cartoon Network shows, all of which are no longer the case.

Shareholders of Paramount Skydance have to ask themselves whether or not this ridiculous amount of money is worth it. Have the assets of the newly formed Warner Bros./Discovery appreciated by almost double in three years and, if so, why on earth would the divestment that launched this have even been necessary? If a company is able to grow by almost double in the last three years in the market uncertainty that has plagued Hollywood post-COVID shutdowns, why are they entertaining offers at all?

And what if the WGA, DGA, SAG, or IATSE show some spine and decide to actually take practical steps if the merger goes through? What if individual creators who made their money for WB decide to leave under Paramount's leadership like the exodus seen at CBS News? Will Gunn stay on as the head of DC Studios? Will George R.R. Martin or the Tolkien estate continue to work with you under new leadership? Then what? You're just on the hook for an empty husk at over a hundred billion dollars.

It may not be today, or tomorrow, or even in the next few months, but there will come a day when people are fed up. They will be tired of being fed political propaganda repackaged as entertainment bankrolled by people who actively hate them. In that moment, the viewer and consumer will learn something of vital importance in a capitalist system: ultimately they have all the power. A studio can own all the IP on the planet, the rights to every sporting event, and have the ability to create a monoculture of their own design, but in that moment the simplest act of rebellion is just not engaging with their creations. Turning the television off, canceling the subscription service, and simply disconnecting removes all their power.

When the day comes that they are playing their movies to empty theaters, broadcasting their shows to black screens, and screaming into the void of their own creation, that will be the day they realize that these large studios serve us as viewers, not the other way around.