Warner Bros Discovery Rejects Paramount’s $108 Billion Bid, Backs Netflix Deal

Warner Bros Discovery has formally rejected Paramount Skydance’s $108.4-billion hostile takeover bid, citing concerns over financing credibility, shareholder risk and deal uncertainty. The media giant’s board said it continues to back its existing merger agreement with Netflix, calling it the more secure and financially sound option.

In a letter to shareholders disclosed through a regulatory filing, the Warner Bros Discovery board said Paramount had repeatedly misrepresented its offer as fully guaranteed by the Ellison family, led by Oracle founder Larry Ellison. According to the board, the proposed $30-per-share cash bid was never fully backstopped and carried “numerous, significant risks” for shareholders.

Why Warner Bros Rejected Paramount’s Bid

The board raised serious doubts about Paramount’s financing structure, noting that the latest proposal relied heavily on the Lawrence J. Ellison Revocable Trust rather than a direct commitment from the Ellison family. It said the trust’s assets and liabilities are not publicly disclosed, can change at any time and would cover only 32% of the required equity while capping liability at $2.8 billion.

Warner Bros Discovery also highlighted Paramount’s relatively weak financial position, pointing out its market capitalisation of roughly $15 billion and a credit rating just above junk status. If the deal went through, the board warned, Paramount’s debt would surge to nearly seven times operating income with limited free cash flow.

The board further criticised Paramount’s projected $9-billion synergy target as overly ambitious, warning it could lead to additional job losses and operational strain across the industry. It also objected to restrictive operating conditions proposed by Paramount, including limits on new content licensing during the interim period.

Netflix Deal Seen as Lower Risk

In contrast, Warner Bros Discovery said Netflix’s binding $27.75-per-share offer provides greater certainty. The Netflix deal covers Warner Bros’ film and television studios, its content library and the HBO Max streaming platform, and does not require equity financing. The board noted that Netflix’s strong balance sheet, investment-grade credit profile and debt commitments reduce execution risk.

Netflix has also assured Warner Bros Discovery that it will continue theatrical film releases, addressing concerns over reduced cinema output. Additionally, Netflix’s proposed break-up fee of $5.8 billion exceeds Paramount’s $5 billion, further strengthening deal certainty.

Board Defends Process

Responding to claims of unfair treatment, Warner Bros Discovery said it engaged extensively with Paramount, holding dozens of calls and meetings with its leadership and advisers, including direct discussions between CEO David Zaslav and Paramount executives. The board said it repeatedly flagged deficiencies in Paramount’s proposals but never received an offer superior to the Netflix agreement.

While acknowledging that both deals could potentially clear regulatory hurdles, the board concluded that Paramount’s bid carried unacceptable downside risk compared to the Netflix merger.