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Product cover image for Valuing Warner Bros. Discovery for Acquisition: A Bidding War Between Netflix and Paramount

Valuing Warner Bros. Discovery for Acquisition: A Bidding War Between Netflix and Paramount

Zhichuan (Frank) Li, Atif Ikram

Product #:W50846
Supplier:Ivey
Discipline:Finance, Strategy
Setting:United States, 2026
Details:Case (PDF) • 23 pages • 2026-07-08

Subjects:

Finance and investingStrategy

Industries:

Media, entertainment, and professional sports

Geography:

United States
Your Price:$10.54

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On January 22, 2026, the co-chief executive officer of Netflix Inc. (Netflix) faced a critical valuation decision. Six weeks earlier, Netflix had agreed to acquire Warner Bros. Discovery Inc. (WBD) for US$82.7 billion, including Home Box Office (HBO) and HBO Max. Rival bidder Paramount Skydance Corporation (Paramount) launched a hostile $30-per-share all-cash offer, intensifying the bidding contest. WBD shares then traded at $28.85, above the $27.75 Netflix offer, signalling market expectations of either a higher bid or a Paramount victory. Meanwhile, the Netflix share price fell 36 per cent, and the company arranged $42.2 billion in bridge financing. The valuation challenge was to estimate the intrinsic value of WBD, quantify synergies, assess financing and integration risks, and determine whether to raise the bid, hold firm, or walk away.

Learning Objectives

This case is suitable for advanced undergraduate and graduate-level courses in business valuation and mergers and acquisitions. It works best after students have covered discounted cash flow valuation, weighted average cost of capital (WACC), and basic M&A deal structure.

On completing this case, students will be able to do the following:
  • Construct a discounted cash flow (DCF) valuation of a media target using publicly available financial data, evaluate sensitivity to weighted average cost of capital and terminal growth assumptions, and reconcile the DCF with trading comps and precedent transaction multiples.
  • Compare two competing acquisition offers on an apples-to-apples per-share basis, accounting for assets acquired, consideration structure, collar mechanics, termination fee economics, and the value of a stub entity of uncertain worth.
  • Compute the merger arbitrage implied deal completion probability from a target’s market price and connect it to the acquirer’s strategic options.
  • Construct a pro forma leverage and return on invested capital analysis for the acquiring company post-close and assess whether the deal earns its cost of capital.
  • Apply the winner’s curse framework, the strategic-versus-financial-value distinction, and market prices as information to synthesize a well-reasoned acquisition recommendation.
  • Articulate the key legal and structural features of contested mergers and acquisitions—tender offers, proxy fights, termination fees, matching rights, superior proposals, and board fiduciary duties under Delaware law.
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Case Study: Valuing Warner Bros. Discovery for Acquisition: A Bidding War Between Netflix and Paramount (English version) | Ivey Publishing