The bidding war that has flared up between Netflix and Paramount to acquire Warner Brothers Discovery (WBD) has provided further validation that M&A markets are building up a head of steam.

At the beginning of December Netflix announced that it had agreed an US$83 billion takeover of WBD in a deal that would entrench the streaming company as a dominant force in the Hollywood film industry.

Within days, however, rival studio Paramount Skydance, in partnership with private equity firms RedBird Capital and Affinity Partners, launched a US$108 billion hostile bid for WBD, challenging the Netflix offer.

Streaming reshaping media landscape

The WBD deal reflects the disruptive impact of online streaming on the film and television industries, and illustrates how streamers and traditional studios are a manoeuvring to adapt.

WBD is one of the iconic Hollywood Studios and is highly desirable to streamers like Netflix because of its extensive catalogue of high-quality film and television content, ranging from the Hary Potter and Superman franchises to Looney Tunes and Friends. It also owns the HBO franchise, best known for producing high quality series such as The Sopranos, Sex and the City, and Succession.

For Netflix, the largest streaming platform in the world, with more than 300 million subscribers, the WBD deal will not only solidify its position as one of the top three streaming platforms, alongside Amazon and Disney, but also boost its subscriber pipeline.

Fortune reports that through a tie-up with WBD, which owns HBO Max, the fourth largest streamer in the US with 128 million subscribers, Netflix will immediately see a net gain in subscriber numbers, even when overlapping subscribers are accounted for.

Consolidating subscribers is only one strand of the deal rationale for Netflix, however, which also sees huge value in the WBD production capability. According to analysis from Wolfe Research quoted in the Financial Times, new content represents only 5% of the of the total programming available on Netflix, but accounts for more than a fifth of what subscribers watch.

The rationale for Paramount to step in with a higher bid is underpinned by similar drivers. Its Paramount+ streaming currently ranks as the fifth-largest streamer in the US with around 78 million subscribers. If combined with HBO Max it will be competing neck-and-neck with Disney for a top three spot.

Unlike the Netflix bid, where WBD will progress plans to spin-off its cable television assets, Paramount wants to keep WBD intact, combining its cable assets with the Paramount cable TV business to build scale, strengthen negotiating power and find cost synergies.

Hurdles to clear

The bids for WBD are a welcome development for the wider M&A ecosystem, which will see this bidding war as a further sign that momentum for big ticket deals is back the following the record US$55 billion buyout of video game business EA in the Autumn.

The EA and WBD transactions have followed a cluster of jumbo deals earlier in the year, with Boston Consulting Group noting that the number of large M&A deals worth US$10 billion has increased by more than a quarter through the course of 2025. There have now been enough “one-off” big ticket transactions to suggest that momentum in M&A market is indeed building, and after a patchy 2025, that will give dealmakers reason for cheer.

The WBD bidding war, however, still has a way to run before a transaction closes. Both bids will face antitrust scrutiny – Netflix because of its position as the dominant streamer, and Paramount because, like WBD, it already owns a major production studio. US President Donald Trump, meanwhile, has said he “would be involved” in any decisions. There could be some twists and turns yet.