Warner Bros. Discovery’s board has once again turned down a bid from Paramount and advised shareholders to stick with Netflix’s competing offer. In a message to shareholders, Warner Bros.’ board warned that Paramount’s revised $108.4 billion hostile bid represented a risky leveraged buyout that investors should avoid. The board highlighted the excessive debt financing required by Paramount’s offer, increasing the closing risk. It reiterated its support for Netflix’s $82.7 billion deal for the film and television studio and other assets, emphasizing the superior value and certainty it provides compared to Paramount’s proposal.
Warner Bros. has attracted interest from both Paramount and Netflix, each vying for control of the studio and its valuable content library, which includes iconic franchises like “Harry Potter,” “Game of Thrones,” “Friends,” and DC Comics properties, along with classic films such as “Casablanca” and “Citizen Kane.” Warner’s leadership has consistently rejected Paramount’s bids and encouraged shareholders to back the sale to Netflix instead.
Paramount recently disclosed an “irrevocable personal guarantee” from Larry Ellison, the father of Paramount CEO David Ellison, to support $40.4 billion in equity financing for its bid. Paramount also raised its promised payout to shareholders to $5.8 billion if regulators block the deal, matching Netflix’s offer. However, Warner Bros.’ board expressed concerns about Paramount’s financing plan, which would burden the studio with $87 billion in debt post-acquisition, making it the largest leveraged buyout in history.
In response to Paramount’s amended offer, Warner Bros. issued a 67-page merger filing outlining the reasons for rejecting the bid. While acknowledging some improvements, such as Ellison’s guarantee and a higher reverse termination fee, the board deemed Paramount’s offer to have significant costs compared to Netflix’s proposal. Netflix’s co-CEOs welcomed Warner Bros.’ decision, emphasizing the value their deal brings to stockholders, consumers, and the entertainment industry.
Paramount has not provided immediate comment, and its hostile bid remains active, with Warner shareholders having until Jan. 21 to tender their shares. The battle for Warner intensifies as the two suitors have different acquisition goals: Netflix aims to acquire Warner’s studio and streaming business, while Paramount seeks the entire company, including networks like CNN and Discovery.
Both potential mergers face substantial antitrust scrutiny and regulatory challenges, particularly in the U.S., where the Justice Department may intervene. The involvement of U.S. President Donald Trump adds a political dimension to the process, potentially impacting the outcome. The chosen deal will have far-reaching implications for the entertainment industry, affecting movie production, distribution, and the news media landscape.