Netflix lost the Warner Bros. deal to Paramount. They may have dodged a bullet.

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For all Americans worried over the future of the free press, quality TV programming, and great cinema, Thursday’s announcement landed as an earthquake: Netflix was giving up. Paramount Skydance finally outbid the streamer this week by offering Warner Bros. Discovery $31 a share, at a total of $111 billion, for everything in its corporate portfolio—and it would not get a financial counter from Netflix in turn.

WBD’s directors still have to formally accept this outcome, but Paramount Skydance CEO David Ellison, and his superwealthy father, Larry, have won. After successfully persuading the Trump administration to grant David’s Skydance Media control over Paramount’s movie and TV studios, they would now also have oversight of top WBD properties such as CNN and HBO. The news should chill anybody who remembers those reports of Larry meeting with President Donald Trump to discuss axing the liberal CNN hosts they dislike. (Reportedly, those newsroom staffers are already freaking out.)

To be clear, it’s not as though there was any best-case scenario in a Warner Bros. sale. Filmmakers and critics fretted, reasonably, that a Netflix acquisition would kill off the moviegoing experience for good, in light of Netflix CEO Ted Sarandos’ professed antipathy toward theater-exclusive releases. Meanwhile, CNN and the rest of WBD’s struggling cable properties would have been dumped into a spinoff company that assumed the heaping debt from the merger. There inevitably would have been major programming cuts. But the cold comfort was that the Ellisons wouldn’t get to transform CNN into something resembling their overhaul of CBS News, which has become a lowly rated exercise in Trump appeasement.

But with this deal on the table, the Ellisons could gain singular control over an unfathomably vast slice of American information and culture: a Paramount Skydance Warner Bros. Discovery megaconglomerate, all added to Larry’s corporate ownership of American users’ TikTok data. Nevertheless, it is important to remember that this isn’t yet a foregone conclusion by any means—and that there are multiple uphill slogs ahead for PSWBD.

Are you sure about that, or is that just cope?

I’m serious! For one thing, PSWBD is a far more blatant and obvious antitrust violation than anything Netflix could have planned. The latter only wanted to take the bits of WBD it liked (e.g., Warner Bros. film and TV, HBO, Turner Classic Movies, DC Studios) while leaving the rest to stew in a spinoff firm. Paramount Skydance, however, is going for all of it, meaning that every sector from movie/TV production to distribution to broadcasting to streaming will be tightly rolled up and optimized—locking out even more hopeful creatives from fair opportunities to break into those industries.

That’s how the Trump administration explicitly prefers things, but the deal will still have to clear the courts here, as well as other regulators abroad. Democratic state attorneys plan to sue to block this merger as soon as possible, and they’re likely to find sympathetic judges, since federal courts have warmed to trustbusting in recent years. A judge could file an injunction blocking the merger while determining whether any of this passes constitutional muster. They could also pass a summary judgment against Paramount if state Dems make an urgent, persuasive case—even though Paramount would inevitably appeal that decision. However those suits go, the court process would play out for years. Meanwhile, regulators in Europe will also get a say, and they’ll be listening to the local theater owners worried about the ever-shrinking number of buyers and distributors for global cinema. The Europeans will likewise scrutinize the billions of dollars of foreign cash pouring into this thing.

Wait, who’s providing that money?

At least $24 billion is covered by the sovereign funds of some famously autocratic, propagandistic Gulf states: Saudi Arabia, the United Arab Emirates, and Qatar. Those arrangements carry a slight whiff of corruption, as these funds carry investments from Trump inner-circle members like Trump son-in-law Jared Kushner and presidential policy adviser Marc Rowan (CEO of Apollo Global Management, which is backing a chunk of this deal). Regulators will pay close attention to those relationships, while looking to make sure these censorship-happy nations don’t exercise any undue influence over all this media.

Paramount Skydance is barely worth $11 billion. How does it have all this money to spend?

To pull off the deal, the Ellisons are stacking debts on top of debts. Not only are they absorbing WBD’s $33 billion debt load; they’re adding tens of billions more in borrowed money. Apollo, backed by the Gulf states and some major banks, is providing $57.5 billion in debt financing; another $45.7 billion is coming from a trust in Larry Ellison’s name, backed by his (for now) highly valued Oracle stock. Paramount Skydance isn’t putting up too much of its own cash, but holy God is it adding a lot to the $14 billion in debt already squirming on its balance sheet. Keep in mind, too, that outside of the $111 billion to pay out Warner Bros. Discovery shareholders, Paramount is covering nearly $20 billion of the loans and fees WBD incurred throughout this whole process.

We may live in an era where tech firms toss about tens of billions of dollars like that’s nothing, but even so, there is so much money involved here. Paramount’s annual profits have never reached such heights, and while it’ll pursue some aggressive cost-cutting (reportedly up to $6 billion), the numbers still don’t add up.

So what you’re saying is there’s a chance this all falls apart?

I’m not sure about total implosion, but there’s a not-insignificant chance the Ellisons will soon find themselves way, way over their heads, having overpaid drastically for a portfolio that’s not gonna be anywhere as lucrative for them. Still, that will depend on lawmakers, regulators, and conscientious customers opposing this with all they’ve got, and soon. American unions and theater owners are already lobbying the feds. California’s attorney general has launched an investigation into how PSWBD would affect Hollywood as a whole and is likely to lead a suit, having declared that this is not a “done deal.” Other top Dems in Congress are planning investigations of their own, especially with regard to Trump’s role in the deal and his longtime vendetta against CNN. Veteran TV journalist Rick Ellis called on viewers in Europe to call representatives with their concerns; there’s a chance we could also see a Paramount+ boycott of the kind that ensued after Stephen Colbert’s CBS show was ruthlessly canceled. However it starts, the fight to stop the Ellisons from monopolizing and reshaping America’s prized media institutions has to start now.

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