A business professor breaks down the Netflix, Warner Bros., and Paramount corporate war.

We are getting a front row seat to a riveting cinematic battle—and we’re not talking about those crappy seats for One Battle After Another on IMAX. We’re talking Netflix vs. Paramount.

Here’s the state of play, if you’re arriving late: Netflix won a bidding war for the purchase of Warner Bros. on December 6, with an offer of $82.7 billion (equity value of $72 billion). Then Paramount called the bidding process “unfair” and launched a rival, hostile takeover bid for $108 billion in cash, addressing shareholders directly instead of through the board of directors, as Netflix did. The Paramount offer is also for the entire company, including cable networks CNN, TBS, TNT, and The Food Network, among others. In the Netflix deal, they would be spun off and sold separately.

And this is just the prequel. It will likely take months, if not years, for the acquisition to go through with whoever ends up winning. To get a fuller picture about what this deal means and what’s happening in the marketplace, CFO Brew spoke with Anthony Marciano, clinical professor of finance at NYU Stern School of Business. (Warning: spoilers!)

This interview has been edited for length and clarity.

What does this deal tell us about the state of M&A in the market as a whole?

M&A does often come in waves. Seventies is conglomeration, ’80s was LBOs [leveraged buyouts], ’90s strategic acquisition. And a lot of that is driven by financial markets, like prices were low in the ’80s and higher in the ’90s. When you do have trends, part of it is driven by economic fundamentals, as opposed to financial fundamentals. That was a lot of words to say, if there’s anything going on, it’s just in this particular segment.

So what is going on in the film and TV segment?

To me, there’s two interesting things, which is the segment overall, but also the specifics of this specific deal. Netflix valuation has gone down more than the value of Warner Bros. [since the leak of the deal in October]. So obviously, there’s more going on that the market doesn’t see synergies with Netflix…They’re down over $100 billion, so that’s a huge percentage of the value of the company.

The market must believe that the synergies with Netflix are not at the same level as Paramount with Warner Bros…And some of that’s clearly Netflix is getting revalued now.

My wife is a strategy professor. She’s been screaming at her students that she thought Netflix was overvalued for quite some time. I don’t know why the market works this way, where it took this event for them to see it, but there’s clearly that going on. That has nothing to do with M&A; the M&A triggered a spotlight [on Netflix]. On top of that, for some reason, the market’s saying they don’t think Netflix has the same synergy with Warner Bros. that Paramount does.

What are the synergies they’re looking at?

There are three levels of synergies here. There’s horizontal synergies with content, there’s horizontal synergies with streaming, and then there’s vertical synergies between content and streaming. So the market must be seeing that in the Paramount case, the combination of those three is much higher than Netflix…My suspicion is they think that Netflix already has such saturation that picking up HBO might not increase that number. And if it’s not going to increase that number, you’re not going to get horizontal synergies. You’re not going to get vertical synergies a whole lot either.

In the past few months, we’ve seen federal judges hand Meta an antitrust win and Google avoid the most severe punishments of an antitrust ruling. What do you think will happen with this case?

Ten years ago, I would have been willing to bet they would let it go. Because for 20 years they let everything go…A lot of economists were up in arms, especially after that famous Facebook deal [to acquire WhatsApp]. This was very anticompetitive. So I wouldn’t be surprised if they limit Netflix.