There's a classic scene in disaster movies: two characters falling together try to grab onto each other, convinced that'll somehow stop the fall.

Spoiler: it doesn't.

That's pretty much what it looks like when Warner Bros. Discovery signals that a $31-per-share offer for Paramount Global could be more attractive than anything Netflix might put on the table.

Take a breath. Let me break down what's actually going on here — and why you should be skeptical.

The Legacy Media Circus in Full Panic Mode

Paramount is in bad shape. That's no secret. The company is buried in debt, bleeding streaming subscribers, and its cable TV business model is melting in slow motion like a glacier at the equator.

Netflix, on the other hand, already went through its near-death experience, reinvented itself, and today actually turns a real profit. It has genuine skin in the game — the kind of thing Taleb would say separates the adults from the children in this market.

So why would Netflix walk into a merger with Paramount? Why buy a mismanaged liability when you've already won the streaming war?

Answer: it probably wouldn't. And it probably won't.

Warner as the "White Knight" — Or Not

Warner Bros. Discovery, run by David Zaslav — the guy who became infamous for canceling finished films to harvest tax write-offs — now shows up claiming its $31-per-share offer would be superior to anything Netflix puts on the table.

Let's translate the corporate-speak here:

"Our proposal is better" = "Please consider our offer because we're just as strapped as you are and we need the scale to avoid going under alone."

Warner has its own problems. Max (their streaming service) is still trying to find its footing. The company's post-merger debt from the Discovery deal still hangs around its neck like a concrete block. And traditional TV ad revenue keeps melting away.

Two companies with troubled balance sheets merging doesn't create a healthy company. It creates a bigger company with bigger problems. Simple math.

What Graham Would Say About This

Benjamin Graham — the father of value investing, Buffett's mentor — had a basic principle: price is what you pay, value is what you get.

$31 per share for Paramount. Sounds like a number. But what are you actually buying?

  • A valuable content library? Yes, that's there.
  • A historic brand? Absolutely.
  • A mountain of debt, a questionable management team, and a linear TV business in structural collapse? Also yes. All bundled together in the same package.

A stock price tells you nothing on its own. Context is everything. And the context here is screaming: watch out.

Hollywood Has Always Been Like This

Don't romanticize it. Hollywood has always been a cocktail of art, ego, debt, and creative accounting. The studios always spent more than they made, bet on franchises, and prayed the next blockbuster would cover the last one's tab.

Streaming was sold as the salvation. "We're going to be the next Netflix." Everybody said it. Disney+, Peacock, Paramount+, Max, Apple TV+...

You know how many of those services are consistently profitable?

One. Netflix.

The rest are either burning cash, depending on a larger conglomerate to survive, or — like Paramount — becoming acquisition targets.

The market always sends the bill eventually. Always.

What Should the Average Investor Do With This?

If you're looking at legacy media stocks thinking "this looks cheap," watch out for the value trap.

A stock in a company undergoing structural decline can look cheap on historical earnings multiples. But if the business is systematically losing relevance — as all of cable TV is — what looks cheap today can be expensive tomorrow.

There's a name for this in the market: value trap. You buy in thinking you've found a bargain, and "cheap" just keeps getting cheaper.

Kovner, one of the greatest macro traders in history, said the biggest mistake is confusing the price of something with its value. And in markets dealing with companies caught in disruptive transitions, that mistake is costly.

Warner wants Paramount. Paramount wants a buyer. The market is watching.

And while the suits debate synergies and EBITDA multiples in glass-walled conference rooms in New York, the real question remains unanswered:

When two companies that both missed the digital turn try to merge just to survive, who exactly is buying what — and why should anyone believe the outcome will be any different this time?

The circus has a name on the marquee. The clowns are already in the ring.