What to know about the landmark Warner Bros. Discovery sale

Earlier this year, the streaming and entertainment industry witnessed one of its most high-stakes megadeals ever, stunning industry observers. Not only is it historic in its size, but it is also predicted to disrupt Hollywood and the media business as we know it.

After years of Warner Bros. Discovery struggling under the weight of billions of dollars in debt, compounded by declining cable viewership and fierce competition from streaming platforms, the company has been considering major strategic changes, including selling its entertainment assets to one of its rivals.

Several major players saw the potential in acquiring the media giant, and in December, Netflix announced it would acquire WBD’s studios and streaming for $82.7 billion.

But in a surprise eleventh-hour move in late February, the David Ellison-run Paramount became the winner of this bidding war, offering $111 billion to acquire all of Warner Bros. Discovery’s assets, including its studios, HBO, streaming platforms, games, and TV networks such as CNN and HGTV. Paramount was itself recently acquired by Ellison with significant support from his father, Larry Ellison — the Oracle chairman, world’s sixth-richest person, and major Trump donor.

Paramount’s offer was approved the U.S. Department of Justice (DOJ) in June. However, a federal judge just paused the deal after a lawsuit was filed on July 13 by a coalition of 12 state attorneys general.

Let’s break down exactly what is happening, what’s at stake, and what could come next.

​This all started back in October when Warner Bros. Discovery (WBD) revealed it was exploring a potential sale after receiving unsolicited interest from several major players in the industry.

​The bidding process quickly became competitive, and Paramount and Comcast emerged as serious contenders, with Paramount initially viewed as the frontrunner.

However, WBD’s board eventually determined that an offer from the streaming giant Netflix was the most attractive. Netflix offered $82.7 billion for just Warner’s film, television, and streaming assets.

Thus began the bidding war. Paramount believed its bid, of approximately $108 billion for all of Warner’s assets, was superior to Netflix’s offer that focused on just the studios and streaming. To sweeten its deal, Netflix amended its agreement in January to an all-cash offer at $27.75 per share of Warner Bros. Discovery, further reassuring investors and paving the way for the deal to proceed.

​Paramount persisted in its attempts to acquire WBD . Still, the Warner board repeatedly rejected its offers, citing concerns about Paramount’s heavy debt load and the increased risk associated with its proposal, including concern over the suite of investors bankrolling Paramount’s bid, which includes Saudi, Qatari, and Abu Dhabi sovereign wealth funds. The board noted that Paramount’s offer would have left the combined company burdened with $87 billion in debt, a risk they were unwilling to take at the time.