The Biggest Obstacle to Netflix Acquiring Warner Bros. Discovery (Hint: It's Not Paramount)

Love triangles make compelling viewing entertainment, but the hottest trio right now isn't airing on a popular network or one of the leading streaming services. The must-watch love triangle of the season happens to be the one involving three of the media companies themselves.

Netflix (NASDAQ: NFLX) has had a deal in place to acquire most of Warner Bros. Discovery's (NASDAQ: WBD) assets since November. Both parties signed off on a $72 billion deal that is worth closer to $83 billion on an enterprise value basis for the streaming and studio assets. Warner Bros. Discovery would spin off its linear networks and less lucrative media businesses before the wedding ceremony.

Image source: Getty Images.

It's a cute couple, but at least one suitor hasn't left the front porch. Scorned losing bidder Paramount Skydance (NASDAQ: PSKY) isn't willing to take no for an answer. It wants all of Warner Bros. Discovery, and it's not giving up on its passioned pursuit.

In Hollywood -- think Casablanca, Bridget Jones's Diary, The Philadelphia Story, etc. -- the choice is up to the subject of the rivaled affections. It's the characters played by Ingrid Bergman, Renee Zellweger, and Grace Kelly who have the final say in their respective love-triangle classics. Things are slightly different in corporate America. Warner Bros. Discovery gets to pick its soulmate, but the parents have the final say on the proposed pairing.

Here's looking at you, bid

Most buyouts -- even those entangled in ferocious bidding battles -- eventually happen. Things get hairier when it's giants hitting on giants. Netflix and Warner Bros. Discovery are gargantuan media stocks. From the perspective of streaming service stocks, Netflix and Warner Bros. Discovery's HBO Max are leaders in the premium space. There's a little more wiggle room when you broaden the scope to cover entertainment or content creation.

The U.S. Department of Justice and perhaps even the Federal Trade Commission will be mulling the combination of Netflix with Warner Bros. Discovery very closely. Would the two businesses coming together make streaming services more expensive for consumers? Will the new entity become too powerful? Netflix already has a massive audience of 325 million subscribers worldwide. Will it become too large if it also includes HBO Max, DC Comics, and the Harry Potter franchise?

These are also global media companies. The European Commission can be stingy, too. It may not block the deal itself, but it may force Netflix into concessions if it wants to continue doing business across Europe.

Netflix investors may not mind if the wedding gets called off by regulatory agencies. The streaming service can find other potential partners. Netflix stock has already surrendered more than $100 billion in market cap since emerging as a bidder for Warner Bros. Discovery. It's not a good look when you shed more than the value of your acquisition target. The saga will still have to play itself out, and it could take several quarters before the story settles. In the meantime, you can be sure that Netflix will want the streaming rights to this larger-than-life love story.

Rick Munarriz has positions in Netflix. The Motley Fool has positions in and recommends Netflix and Warner Bros. Discovery. The Motley Fool has a disclosure policy.