How Netflix and the Ellisons Could Compromise on Warner

We’re heading into our last full working week of the year, so the news flow is likely to start quieting down. (Be on the lookout for ServiceNow’s next big acquisition, however). One story that’s likely to chug along through the holidays is the battle between Netflix and the Ellison family’s Paramount Skydance for Warner Bros. Discovery. There’s sure to be fireworks this week, if for no other reason than the board of WBD’s promise to respond to Paramount’s hostile offer by week’s end.

Wall Street seems to be expecting a development of a different kind: WBD shares closed on Friday at $29.98, two cents below Paramount’s $30-a-share offer and a few dollars higher than Netflix’s $27.75 cash and stock offer, which WBD has accepted. That implies traders expect someone to raise their bid. Logically that should be Netflix, whose bid is lower than Paramount’s (largely because Netflix is not buying the whole company). But for the streaming firm to go higher would require taking on significantly more debt, making an already-risky deal even riskier. Maybe the companies should compromise: How about if Netflix and Paramount split WBD between them?