Company-law students say the bidding warfare for Warner Bros. Discovery has develop into an odd type of authorized nostalgia journey, dragging Paramount again to middle stage for the primary time in a long timeand reviving classic doctrines from Revlon to the “Cuban beer” protection as Netflix tries to lock up a as soon as‑in‑a‑era deal. What seems on the floor like a clear strategic bolt‑on for the world’s largest streamer is, within the eyes of the specialists who train these things, a big-budget Hollywood legacy act, following within the footsteps of the takeover sagas that outlined Twentieth-century Tinseltown.
Anybody who lived by the 1989 takeover that resulted within the landmark lawsuit Paramount Communications v. Time battle hears an echo. Again then, Time Inc. was making an attempt to merge with Warner Communications when Paramount tried to explode the take care of a wealthy hostile bid for Time itself, triggering a bidding warfare and a landmark Delaware ruling on when, and the way, boards can say no. After all, Time Warner emerged as a media powerhouse, reigning for many years earlier than a 2000 tie-up with AOL that many contemplate to be probably the most disastrous merger in company historical past.
Anthony Sabino, a veteran authorized practitioner and professor at St. John’s College in Queens, N.Y., who teaches these instances, known as as we speak’s battle “a sequel, not a reboot,” with Paramount, which is competing with Netflix to purchase WBD, as soon as once more within the eye of a takeover hurricane. He identified that Paramount additionally fronted the 1994 Paramount v. QVC conflict—additionally in the end determined in Delaware—the place Barry Diller’s QVC was rebuffed in favor of Sumner Redstone’s Viacomin a bid to purchase Paramount, cementing the trendyempire that has since mutated into Paramount World and, as of 2024, Paramount Skydance.
The identical manufacturers and a number of the similar energy gamers, from John Malone to Redstone’s successors, are again on the decision sheet, solely this time the battleground is streaming as an alternative of cable and print. Diller himself agreed, telling The New York Instances by electronic mail earlier this week, “sure, it’s turning right into a repeat.”
However the fast flip of occasions that noticed Netflix strike a binding deal value $72 billion in fairness (and almost $83 billion together with debt), solely to see Paramount go public with an all-but hostile bid value $77.9 billion in fairness (and $108 billion together with debt) has additionally introduced a cosmetics title into the dialog, well-known to company legal professionals: Revlon.
The Revlon aspect
Named after the 1986 Delaware choice in Revlon v. MacAndrews & Forbes, the Revlon doctrine “governs type of how it’s best to behave while you’re promoting [a] firm, and it says you’ll be able to’t favor, you’ll be able to’t take into consideration something aside from shareholder worth,” based on Columbia legislation professor Dorothy Lund. She defined that in that deal, the hostile takeover of cosmetics agency Revlon by the famed financier Ronald Perelman within the mid-Eighties, the Revlon CEO had a “deep private antipathy” for Perelman and structured a take care of a unique personal fairness purchaser. Finally, the Delaware Supreme Courtroom dominated that the board of Revlon, like each different firm, has a “heightened accountability to be an auctioneer and excited about getting one of the best worth for shareholders,” Lund mentioned, “and what you’ll be able to’t do is play favorites. All the things that it’s a must to do needs to be carried out in service of shareholder worth.”
The announcement of the Netflix deal on Dec. 5 implied that Warner had made your best option for shareholders by selecting the big-red streamer, however Paramount’s announcement the following enterprise day, with a doubtlessly larger bid, put the Revlon precedent in play, each Sabino and Lund defined. Paramount’s subsequent regulatory submitting revealed what it claimed was a sample of minimal engagement from main Warner stakeholders, together with CEO David Zaslav and the so-called “cable cowboy” John Malone, who serves as chair emeritus, having stepped down from the board earlier this 12 months whereas retaining important inventory. (Malone backed Diller and QVC of their in the end unsuccessful 1994 bid for Paramount, as each Malone and Diller mentioned in separate memoirs launched in 2025.)
Whereas Lund mentioned that she doesn’t personally assume there’s a powerful Revlon declare fairly but, “I believe the board needs to be actually cautious what they do within the coming weeks,” as a result of the Warner Bros. Discovery board can’t seem like taking part in favorites for private causes. “Now the tough factor goes to be, clearly everyone’s received cash left on the desk, proper?” Lund famous that Paramount has indicated that its $30-per-share supply just isn’t its final and finest supply, whereas Netflix additionally has room to go up. “Now the board is on this tough place of making an attempt to engineer this deal to get probably the most worth for shareholders.” They may properly be compelled beneath their Revlon obligation to both return to Netflix and say they want a better bid or return to Paramount and take its bid significantly.
Lund mentioned that the two-way battle between Paramount and Netflix is sort of a reality sample ripped from certainly one of her examination books, with Paramount’s David Ellison successfully accusing CEO David Zaslav and the Warner board of violating their Revlon duties by favoring a extra complicated, slower Netflix bundle over a easy all‑money supply. Lund additionally raised the Paramount vs. Time precedent, which was basically in regards to the alternative of a merger companion on cultural slightly than monetary grounds. “You possibly can’t say, ‘Effectively, I similar to the tradition,” which was an argument in that deal the place one bidder was seen as extra prone to protect the Time tradition. Boards can low cost a better value just for concrete causes like firmer financing or cleaner regulatory paths, not as a result of they like a bidder’s vibe, in different phrases. That is on show between Netflix, Warner and Paramount, with Ted Sarandos and David Zaslav reported to be on pleasant phrases, and Paramount’s regulatory filings suggesting a frosty distance between Zaslav and Ellison.
The conflict of personalities is a part of why specialists lick their lips over media megamergers. “These are media personalities,” Sabino mentioned, “and these people are very highly effective people … these are fantastically profitable people. They usually don’t prefer it while you say no.”
Paul Nary, an assistant professor of administration who teaches M&A and tracks dozens of mega‑offers on the Wharton Faculty of Enterprise, mentioned “that is like my equal of a Tremendous Bowl.” He highlighted the unusual enchantment that media belongings are likely to have over time, citing the combination of egos and what are perceived to be “marquee belongings.” Chatting with the doubtless authorized challenges involving Revlon and Time that can doubtless emerge between these two presents, Nary mentioned a valuation dispute shall be key. He mentioned the Netflix and Paramount presents are shut to one another, “relying on how a lot you assess the fairness parts, the way you assess the worth of the spin-out and all of those different issues.”
The worth of the spin-out, an organization to be referred to as Discovery World, stands to be a lot debated over the approaching months, perhaps even in court docket, however a minimum of one analyst has put a quantity on the belongings that Paramount desires to purchase—and Netflix doesn’t, explaining the valuation hole. Financial institution of America Analysis analyst Jessica Reif Ehrlich and her staff launched a be aware on Dec. 7, after the Netflix deal and earlier than the Paramount supply, estimating Netflix’s deal as value greater than $30 per share to WBD shareholders. Ehrlich’s staff calculated Discovery World as being value roughly $3 per share, which might make Netflix’s $27.75-per-share supply richer than Paramount’s. But when Discovery World was value $4 per share, then Paramount’s deal may very well be seen as richer.
Cuban beer, Jewish dentists, and Gulf money
Sabino argued that this case guarantees to recall even some extra esoteric defenses, deep cuts just like thetitles buried contained in the Netflix library. He talked about the “Jewish dentist” protection—a case from the Nineteen Seventies the place opponents of a deal warned that Jewish shoppers would possibly shun a dental‑provide agency if a Kuwait-based funding car succeeded.
There was additionally the much less profitable “Cuban beer” protection that Sabino characterised as a variation of “Jewish dentist.” It arose in 2008 when InBev, aworld beer conglomerate primarily based in Belgium, tried to accumulate the enduring American beer firm Anheuser-Busch. By way of a subsidiary, InBev had operations in Cuba, and Anheuser-Busch tried to lift these as a priority because it tried to maintain its independence. Sabino informed Reuters on the time that it was a “sensible however determined transfer,” and AB InBev was in the end fashioned out of the historic $107 billion merger.
The connection to those offers, in fact, is the Center Jap funding element of the Paramount bid for WBD. Valued at $24 billion, the Center Jap backing was facilitated partly by Jared Kushner, President Trump’s son-in-law, and Sabino mentioned he expects somebody to ask whether or not Individuals will in the end actually need Center Jap sovereign funds holding massive stakes in a Hollywood, regardless that David Ellison claims that these stakes received’t contain any governance rights. Analyst Wealthy Greenfield of LightShed Companions challenged Ellison about this instantly on a convention name about Paramount’s bid: “Simply questioning in the event you might give us any coloration on why they’re investing a lot with no governance, proper? Like what’s the — is there any rationale you’ll be able to present?”
Ellison responded to Greenfield that the compelling “industrial logic” would create an organization producing quite a lot of money circulation instantly. “Whenever you take a look at that from a returns perspective, it’s extremely engaging to—clearly, to all shareholders. And from that standpoint, I believe that’s why our companions clearly are right here.”
Referring to the Center Jap and Kushner-adjacent features of this story being totally different from the authorized textbooks, Lund mentioned “there are features of this that really feel like a throwback, and there’s features of this that simply really feel so 2025.”
“Underneath Revlon,” she mentioned, “it’s a must to take into consideration what’s going to create shareholder worth. You assume that might be a politically impartial factor, proper? However when you’ve got a president that’s on the market saying, I’ve received a perspective on this, and I’m going to be concerned on this, and that’s going to have an effect on regulatory clearance. Now, swiftly, it’s a must to fear about that complete political facet of it as part of your Revlon obligation. And that’s very new.” Lund mentioned dealmakers are confronting political entanglements that they haven’t needed to confront earlier than.
Sabino, against this, downplayed the political facet as “overblown,” arguing that each presents in the end activate cash and legislation, not occasion ties. “I believe politics has little or no to do with it, okay? As a result of once more, the underside line is, that is enterprise. That is about cash, okay?” The president, Sabino added, is a “very energetic man” who “says quite a lot of stuff.” On the finish of the day, Sabino mentioned, he thinks Revlon and Time and shareholder worth will win out, with Sarandos, Ellison and Warner, no matter their political persuasion, taking part in M&A hardball. “These people are lethal critical.”
Editor’s be aware: The creator labored for Netflix from June 2024 by July 2025.
