The Compound and Friends – Episode: "Buy or Die"

Release Date: December 19, 2025
Hosts: Downtown Josh Brown, Michael Batnick
Guest: Bill Cohan (Founding Partner at Puck, Author, ex-M&A Banker)

Episode Overview

The final 2025 episode of The Compound and Friends dives deep into the high-stakes, headline-grabbing media merger battle: Netflix and Paramount’s competing bids to acquire Warner Bros. Discovery (WBD). Guest Bill Cohan, with decades of experience in M&A banking and media reporting, brings a sharp insider's perspective to the mechanics, motivations, personalities, and potential outcomes of what could be the biggest media deal of the era—and one with massive implications for Wall Street, Hollywood, and consumers.

Key Discussion Points & Insights

1. Setting the Stage: The Scope & Stakes

• Why This Merger Matters:
  The Netflix-WBD-Paramount showdown represents not just a mega deal financially (~$90–108 billion at stake), but a crossroads for the future of streaming, sports, Hollywood studios, and consumer experience.

  "It's as big a story as I'm building it up to be." – Josh (05:54)

• Bill Cohan’s Dual Lens:
  As a former Lazard M&A banker (involved in earlier Viacom-Paramount deals) and reporter, Bill revels in the historic resonance and complexity:

  "This is a little bit of history repeating itself... you’re back in your wheelhouse." – Bill (00:14)
  "I'm just laser-focused on this deal and the aspects of the deal and who might win." – Bill (06:38)

2. The Structure & Evolution of the Deal

• Debt as Destiny:
  WBD’s $55B in legacy debt (largely from AT&T) influenced its need for a strategic “lifeline” from a larger acquirer. Zaslav’s main incentive: reduce debt and unlock equity value.

  "He was, his reward was to pay down this debt. So I always viewed this as a publicly traded LBO..." – Bill (08:01)

• From Single-Digit Shares to Stock Surge:
  The narrative shifted from regulatory bottlenecks and ‘dead money’ to stock surges as the regulatory clock ran out and buyout speculation ramped up.

  "Literally since then the stock has gone from like... seven and a quarter to 30 bucks a share." – Bill (09:52)

• Regulatory Chess:
  Deal-making delayed for two years post-reverse Morris Trust to avoid tax issues; election-year politics loom large, with Trump-era FTC changes and personalities (Ellisons "Trump-friendly") factoring in.

  "Trump comes in and he’s not a huge fan obviously of all the things... unless the suitor is Trump friendly..." – Josh (09:52)

3. Who’s at the Table & Why

• Potential Suitors:
  Bill’s sources cited not just Paramount but interest from Comcast, Netflix, Amazon, and possibly Apple.

  "I’ve been hearing from my sources that it was more than just Paramount... Comcast was interested... Netflix... maybe even Amazon..." – Bill (11:33)

• Why Netflix? Why Now?
  Netflix has historically eschewed big M&A, with their largest prior deal at $700M compared to this $90B+ move. What’s driving them?

  • Bulking up content ahead of a YouTube/Big Tech war.
  • Preempting Paramount’s control and further consolidating streaming subscribers.

  "Never until it makes sense, right." – Josh (33:34)
  "If you can get access to the Warner Brothers library, Max content... put them together, 450 million subscribers. Hello, game over." – Bill (33:37)

• Shareholders’ (and Arbitrageurs’) Role:
  With so much speculation, event-driven or arbitrage traders ("arbs") are a key part of WBD’s current shareholder base, looking for quick upside in a hotly contested, hostile M&A environment not seen for decades.

4. Deal Mechanics: Money, Breakup Fees, & Calculation

• Breakup Fees:

  • Regulatory breakup: Netflix owes WBD $5.8B if regulatory blocks occur; Paramount would owe $5B in same scenario.
  • If WBD backs out for a Paramount deal, WBD owes Netflix $2.8B immediately—a critical sticking point, as Paramount hasn’t guaranteed to reimburse WBD upfront.

  "That's one of the things that's peeving the WBD board..." – Bill (17:49)

• Valuation Games:
  Netflix offered $27.75/share plus the value of the 'Global Networks' spinoff, which Paramount wants valued as low as possible; credible sell-side research values the stub higher, boosting Netflix’s offer.

  "At the moment, that is the Netflix deal." – Bill (29:45)

• Exploding Bids:
  Netflix bid had an ‘exploding’ deadline—step up now or lose it.

  "Buy or die." – Josh (30:07)

5. Politics, Power, and the Ellison Family

• Larry Ellison as Backer:
  Paramount’s bid is backed by the Ellison family and Middle Eastern sovereign wealth. An odd technicality (the "Larry J. Ellison revocable trust" isn’t formally listed in Oracle’s proxy) raised doubts about funding certainty, sowing WBD skepticism.

  "For whatever reason... the WBD board just doesn't seem to believe that." – Bill (20:04)

• Middle Eastern Capital & Influence:
  60% of Paramount’s equity would come from three Middle Eastern sovereign funds; voting rights/board seats stripped to avoid U.S. regulatory issues (CFIUS/FCC), raising soft power concerns.

  "What is even the point... if you're Middle Eastern billionaires... is it a Trojan horse?" – Josh (26:00)
  "They will use some sort of soft-ish influence... access to the equity owners..." – Bill (26:34)

• Conspiracy vs. Simple Preference:
  The Ellison/Paramount camp believe they’ve answered all issues, suspect WBD just plain prefers to deal with Netflix and Ted Sarandos, where CEO Zaslav could remain a major player.

6. The Sympathetic Loser: What If Paramount Fails?

• Paramount's Options:
  If outbid, can pivot to smaller studio rollups (A24, Lionsgate), or even fold into NBCUniversal. Noted: Paramount ($15B mkt cap) is trying to buy an enormously larger rival (~$108B deal!).

  "The fish is trying to eat the whale." – Michael (42:23)

7. Hollywood, Labor, and the Creative Ecosystem

• Fallout for Labor & Content Creators:

  • Netflix would own the studio assets but no Hollywood infrastructure; synergies come from cutting licensing fees.
  • Paramount would merge two studio systems—leading to more layoffs and less competition for creative labor.

  "Paramount buying the studio is really bad for labor in Hollywood..." – Michael (38:21)

• Consumer Impact:
  Regardless of outcome, fewer buyers for content will mean fewer opportunities for creators and possibly higher consolidated pricing for consumers.

  "One less buyer for content is a really big deal." – Josh (39:07)

• The Death of Theaters?
  Streaming surge (especially post-COVID) means even a "rebound year" brings less than half the U.S. ticket sales compared to the early 2000s.

  "It's not going back because... streaming is a very good product." – Bill (39:49)

8. Odds, Speculation, and The Endgame

• Who Wins?
  Cohan’s betting odds: Slight edge to Paramount if they raise their bid (~55% Paramount, 45% Netflix), contrary to betting markets which favor Netflix 72–25.

  "I think the odds are 55% that Paramount raises their bid and wins." – Bill (36:56)

• Netflix’s Strategic Win-Win:
  Netflix stands to gain even if outbid:

  • They trigger a higher price, pocket a $2.8B breakup fee, and possibly secure a lucrative long-term supply contract—while avoiding credit risk that shareholders dislike.

  "They will have gotten Paramount to pay up. They will have gotten a breakup fee, and, if they can get this long term supply agreement... it's a win, win, win." – Bill (35:43)

• Share Price Aftermath:
  If Netflix walks, their share price could soar.

  "If you are of the mind that Netflix loses, the stock is probably a screaming buy..." – Josh (44:57)

9. Wall Street: Banking Boomtime & Private Credit

• Deregulation and M&A Resurgence:
  New DC regime (pro-deregulation) spurred more deals, risk-taking, product launches (crypto, etc.). Big banks are booming: "oligopoly" profits, surging stocks (Goldman Sachs, JP Morgan, Robinhood).

• Private Credit’s Potential Risk:
  The large banks avoid regulatory penalties by syndicating loans to alternative asset managers (Apollo, Blackstone, etc.). There’s more leverage but less danger to depository institutions—though some see risk in sponsor-owned insurance firms holding massive loans.

  "Everybody's sort of getting most of what they want here..." – Bill (51:15)

Notable Quotes & Memorable Moments

• On how the merger drama feels:

  "I'm just... loving it." – Bill (06:38)

• On legacy debt at WBD:

  "Had to take on $55 billion in debt, most of which came from AT&T..." – Bill (08:01)

• On Ellison and the not-so-simple trust issue:

  "If you go to the Oracle proxy statement... there is no Larry J. Ellison revocable trust." – Bill (21:50)

• On Middle Eastern investment, realpolitik style:

  "They're going to have access to the equity owners, whether they'll be sitting around, you know, the boardroom. I guess they won't be." – Bill (26:34)

• On streaming's inevitability:

  "Streaming is a very good product... you stay on your couch, you turn it on when you want, you go to the bathroom, you go get something to drink..." – Bill (39:49)

• On banking deregulation’s impact:

  "It's been a bonanza for what we consider the old Wall Street banks..." – Bill (49:28)

Key Timestamps

• 00:14 – Bill’s background & re-entrance to M&A drama
• 05:54 – Scope and impact of the Netflix-Paramount-WBD deal
• 08:01 – WBD’s debt: why the deal had to happen
• 11:33 – Multiple bidders, regulatory timelines, and the origins of the deal
• 17:00 – Breakup fee mechanics and boardroom negotiations
• 20:04 – Ellison funding: trust issues, market skepticism
• 25:10 – Middle Eastern capital: ownership vs. influence
• 29:45 – Netflix’s economic advantage and board obligations
• 32:02 – Why Netflix shareholders are nervous
• 33:34 – Netflix’s pattern of doing “what makes sense” after saying never
• 35:11 – How Netflix could walk away and still “win”
• 38:08 – Hollywood labor impact and the changing content market
• 40:13 – Movie theater death spiral: hard data
• 44:57 – Market plays: Netflix risk/reward if they walk
• 48:53 – Wall Street: deregulatory renaissance, big bank profits
• 51:15 – Private credit innovation (and risk) in the new era

Final Takeaways

• M&A fireworks are back: 2025 may be remembered as the year mega-deals returned, with an M&A battle for the history books.
• The winner will shape streaming—and Hollywood—for years. Netflix and Paramount each bring distinct risks, rewards, and consequences for labor, consumers, competition, and Wall Street.
• Politics, personalities, and soft power matter as much as economics: From Trump’s thumb on the scale to Ellison’s global reach to Middle Eastern money, this is a deal with layers.
• Wall Street is riding high—but risks remain under the surface: The lending and credit boom could have aftershocks, but for now, the party’s not slowing down.

For more from Bill Cohan, check out his Dry Powder newsletter and upcoming 2026 book on Apollo. For ongoing coverage, visit Puck News and follow The Compound and Friends each week.