I know what’s REALLY going on behind the scenes of the Netflix-Paramount war to buy Warner Bros… and the crucial detail that reveals how this ends: KEVIN O’LEARY

It’s the biggest business story in the world: the on-going battle to buy the media conglomerate Warner Bros Discovery.

In one corner: Paramount, led by David Ellison, son of Oracle founder Larry Ellison.

In the other: Netflix fronted by co-CEO Ted Sarandos.

The opening rounds have gone to Sarandos.

After inking a ‘definitive agreement’ to acquire Warner Bros in December for nearly $83 billion in cash-and-stock, Netflix sweetened their offer on Tuesday.

The streaming giant now says it’s willing to finance the deal with cash-and-debt – $72 billion in hard currency and approximately $11 billion in borrowed money.

Cash is king and stocks can fluctuate up – or down – so this is a vastly improved offer.

Then on Wednesday, Paramount took another shot when the deadline for Warner Bros shareholders to accept their $108 billion hostile takeover bid – an all-cash offer made in December and designed to go over the heads of Warner Bros management in a direct appeal to holders of the public company’s stock – came and went.

According to Warner Bros, 93 percent of their shareholders rejected the deal.

By Thursday morning, Paramount announced that it was extending the deadline – without altering their proposed deal.

Paramount has one knee on the mat and the referee is counting but make no mistake – this fight is far from over.

There’s just too much at stake.

Believe me, I should know. I did plenty of hostile takeovers when I was building the children’s education software company, SoftKey, in the 1980s.

At the time, Softkey controlled the most market share, but we needed more content to fill our devices, which were in the hands of kids across America and Canada. So, we would buy other companies, fire everybody who worked there (with fair severance packages) and take their brand.

I remember running into the same executive, three times. We’d fire him from one company. He’d go to another one. We’d buy that company and fire him again.

Takeovers are brutal. But business is war, and whether you’re in the software industry or the movie and streaming business, the calculus is simple.

If you have the distribution (in my case, it was educational hardware), it nearly always makes sense to add more content and cut costs through consolidation.

I expect that whoever buys Warner Bros will do immediate layoffs to eliminate redundant role – and new operation will be profitable on day one.

The only question now is: why hasn’t Warner Bros taken Paramount’s $108 billion offer over Netflix’s $83 billion deal?

The answer: money talks and BS walks.

There’s only factor that makes a successful hostile takeover bid, and it’s not politics or appeals to the great American spirit.

It’s cold hard cash.

Right now, Warner Bros management and at least a majority of their shareholders believe that Netflix is more likely to be able to put their money where their mouth is.

Netflix is also offering Warner Bros a $5.8 billion break-up fee, if the deal does not go through because of federal (or even foreign) regulatory obstacle.

That must always be a consideration in deals of this magnitude – and the Netflix fee is one of the largest guaranteed payouts in history.

Paramount, on the other hand, has only offered a $5 billion payout.

That math is simple.

But then also consider that Paramount is financing its bid with the help of David’s father, Larry Ellison, who personally guaranteed $40.4 billion, as well as backing from three Gulf sovereign wealth funds based in Saudi Arabia, Abu Dhabi and Qatar.

No doubt Larry Ellison is one of the great American entrepreneurs (not to mention one of the richest men in the world), but this method is old school, harkening back to the days when studios were family-owned.

To some that isn’t a bug, but a feature. It suggests Larry Ellison would be deeply invested in the success of the newly merged business. But there’s a reason their offers continuously get rejected.

The structure of the financing introduces uncertainty.

For instance, imagine you were selling your house and an interested buyer offered all-cash. Then, another potential buyer said they’d give you 20 percent more, but mentions that they’ll have to secure a mortgage from the bank.

Which one do you choose?

A risk-taker may opt for the higher bid, hoping that the buyer has good credit and the bank gives him a loan.

I know which one I’d choose: the cash, now.

All that said, I don’t foresee David Ellison giving up any time soon. Warner Bros Discovery is one of the last truly valuable studio properties left, so he won’t be going down without a fight.

Shareholders will cast the final votes in April. And then, a proposed deal with Netflix will have to be reviewed by the Department of Justice’s Antitrust Division as well as the European Commission.

It’s not truly over ’til it’s over.