Warner Bros. Discovery Chooses Netflix Talks Over Paramount–Skydance Bid
Warner Bros Discovery’s board has unanimously rejected a renewed takeover attempt from Paramount Skydance, arguing that the revised $108.4 billion hostile bid poses excessive financial risk and fails to offer sufficient value to shareholders.
In a letter sent to investors on Wednesday, the board of Warner Bros Discovery said Paramount’s proposal relies on “an extraordinary amount of debt financing,” raising serious concerns about whether the deal could actually be completed. The board reaffirmed its support for a competing offer from Netflix, valued at $82.7 billion, which includes the studio’s film and television operations and other assets.
Both Netflix and Paramount Skydance have been pursuing Warner Bros, whose assets include globally recognized franchises such as “Harry Potter,” “Game of Thrones,” “Friends,” the DC Comics universe, and classic films like “Casablanca” and “Citizen Kane.”
According to the board, Paramount’s plan would leave the combined company with roughly $87 billion in debt once the acquisition closed, making it the largest leveraged buyout ever. The board detailed its objections in a 67-page amended merger filing, released after it voted Tuesday to reject Paramount’s $30-per-share cash offer.
The board wrote that the revised bid “remains inadequate, particularly given the insufficient value it would provide, the lack of certainty in PSKY’s ability to complete the offer, and the risks and costs borne by WBD shareholders should PSKY fail to complete the offer.”
Paramount, which has a market value of about $14 billion, proposed financing the deal with $40 billion in equity personally guaranteed by Larry Ellison and $54 billion in debt. Warner Bros said the structure would further strain Paramount’s already junk-rated credit and increase the likelihood the deal could collapse. Netflix, by contrast, has a market value near $400 billion and an investment-grade credit rating, and has offered $27.75 per share in a mix of cash and stock.
The rejection keeps Warner Bros on track with Netflix despite Paramount’s December 22 revision, which addressed earlier concerns by adding Ellison’s personal guarantee and raising the reverse termination fee to $5.8 billion.
Netflix co-CEOs Ted Sarandos and Greg Peters praised the decision, saying it recognizes their bid “as the superior proposal that will deliver the greatest value to its stockholders, as well as consumers, creators and the broader entertainment industry.”
The filing also highlighted the steep cost of abandoning the Netflix deal. Warner Bros would owe $2.8 billion in termination fees, plus additional lender and financing costs totaling roughly $4.7 billion, or $1.79 per share.
With Warner Bros shares closing at $28.47 on Tuesday, the battle has become one of Hollywood’s most closely watched takeover fights, underscoring the pressure on studios to scale up as streaming competition intensifies and traditional revenues remain volatile.
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