Key Moments
- Warner Bros Discovery’s board unanimously rejected Paramount Skydance’s $108.4 billion hostile bid, calling it highly leveraged and risky.
- Despite the higher headline price, the board reaffirmed support for Netflix’s $82.7 billion offer.
- Warner Bros said walking away from the Netflix deal would trigger about $4.7 billion in additional costs.
Warner Bros Rejects Revised Paramount Skydance Proposal
Warner Bros Discovery’s board has unanimously turned down a renewed takeover bid from Paramount Skydance. The board said the $108.4 billion offer relies heavily on debt and carries significant execution risk. As a result, directors urged shareholders to reject the proposal.
In a letter to investors on Wednesday, the board said the offer depends on an “extraordinary” level of debt financing. Therefore, it reiterated support for Netflix’s $82.7 billion agreement to acquire the studio and related assets.
Meanwhile, Paramount and Netflix continue to compete for control of Warner Bros and its extensive content library. Key franchises include “Harry Potter,” “Game of Thrones,” “Friends,” and the DC Comics universe. The studio also owns classic titles such as “Casablanca” and “Citizen Kane.”
Debt Load and Valuation Concerns
According to the board, Paramount’s proposal would leave Warner Bros with roughly $87 billion in debt once completed. Notably, the company said this would mark the largest leveraged buyout on record.
The board formally rejected the $30-per-share all-cash offer after a vote on Tuesday. It outlined its reasoning in a letter attached to a 67-page amended merger filing.
In the filing, directors said the revised offer remains inadequate. They cited limited value, uncertainty around financing, and high risks for Warner Bros shareholders if the deal fails.
Paramount, which has a market value of about $14 billion, proposed a mix of $40 billion in equity and $54 billion in debt. Importantly, Oracle co-founder Larry Ellison personally guaranteed the equity portion.
However, Warner Bros argued that the structure would further strain Paramount’s credit profile. S&P Global already rates the company at junk status. As a result, the board warned that cash flow pressure could derail the transaction.
By contrast, Netflix has offered $27.75 per share in cash and stock. The streaming giant has a market value of about $400 billion and holds an investment-grade credit rating.
Comparison of Key Offer Terms
| Aspect | Paramount Skydance Offer | Netflix Offer |
|---|---|---|
| Headline deal value | $108.4 billion | $82.7 billion |
| Per-share consideration | $30 per share (cash) | $27.75 per share (cash and stock) |
| Equity financing | $40 billion, guaranteed by Larry Ellison | Not specified |
| Debt financing | $54 billion | Not specified |
| Post-deal debt | $87 billion at Warner Bros | Not specified |
| Reverse termination fee | $5.8 billion | Not specified |
| Credit profile | Junk-rated; ~$14B market cap | Investment-grade; ~$400B market cap |
Break-Up Costs and Deal Protections
The filing showed the board met on December 23 to review Paramount’s amended proposal. While directors acknowledged improvements, they still flagged major drawbacks.
For example, Warner Bros would owe Netflix a $2.8 billion termination fee if it exited the deal. In addition, the company would face $1.5 billion in lender fees and about $350 million in financing costs.
Altogether, Warner Bros estimated total incremental costs of roughly $4.7 billion. That equals about $1.79 per share.
The board also repeated concerns raised earlier in December. Specifically, it warned that Paramount planned to impose operating limits that could weaken Warner Bros’ competitive position.
One restriction would block the planned spin-off of cable networks into a new public entity called Discovery Global. As a result, the board said the proposal offered insufficient protection if the deal failed.
Strategic Stakes in Hollywood’s Power Struggle
The fight for Warner Bros has become one of Hollywood’s most closely watched takeover battles. Studios are racing to build scale as streaming competition intensifies and box office demand remains uncertain.
Although Netflix’s offer carries a lower headline value, analysts say it involves simpler financing and fewer execution risks. By contrast, Paramount’s bid covers all of Warner Bros, including its cable networks.
Harris Oakmark, Warner Bros’ fifth-largest shareholder, previously told Reuters that Paramount’s revised offer fell short. The firm said the proposal failed to fully account for break-up costs.
Paramount has argued its bid would face fewer regulatory hurdles. However, a combined Paramount-Warner Bros group would rival Disney and unite two major television and streaming businesses.
Discovery Global Valuation and Political Scrutiny
Valuation of the planned Discovery Global spin-off remains a key dispute. Analysts estimate the cable assets could be worth up to $4 per share. Paramount, however, values them at just $1.
Meanwhile, political scrutiny has increased. Lawmakers from both parties have raised concerns about media consolidation. U.S. President Donald Trump has also said he plans to weigh in.
Market Reaction and Next Steps
Warner Bros shares closed at $28.47 on Tuesday, according to the article.
Netflix co-CEOs Ted Sarandos and Greg Peters welcomed the board’s decision. They said it recognizes Netflix’s proposal as the best outcome for shareholders, creators, and consumers.
Paramount did not immediately respond to a request for comment. For now, Warner Bros will continue pursuing its agreement with Netflix despite Paramount’s recent revisions.
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