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Warner Bros. Discovery’s board again rejected a takeover bid from Paramount and told shareholders on Wednesday to stick with a rival offer from Netflix.
In a letter to shareholders, Warner Bros.’ board said Paramount’s revised $108.4-billion US hostile bid amounted to a risky leveraged buyout that investors should reject.
The company’s board said Paramount’s offer hinges on “an extraordinary amount of debt financing” that heightens the risk of closing. It reaffirmed its commitment to streaming giant Netflix’s $82.7-billion deal for the film and television studio and other assets.
“Our binding agreement with Netflix will offer superior value at greater levels of certainty, without the significant risks and costs Paramount’s offer would impose on our shareholders,” Warner Bros. Discovery chair Samuel Di Piazza Jr. said in a statement.
Paramount and Netflix have been vying to win control of Warner Bros., and with it, its prized film and television studios and extensive content library. Its lucrative entertainment franchises include Harry Potter, Game of Thrones, Friends and the DC Comics universe, as well as coveted classic films such as Casablanca and Citizen Kane.
Warner’s leadership has repeatedly rebuffed Paramount’s bids and urged shareholders to instead back its the sale of the streaming and studio business to Netflix.
Paramount’s financing plan would saddle the smaller Hollywood studio with $87 billion in debt once the acquisition closed, making it the largest leveraged buyout in history, the Warner Bros. board told shareholders after voting against the $30-per-share cash offer on Tuesday. The letter accompanied a 67-page amended merger filing where it laid out its case for rejecting Paramount’s offer.
Paramount Skydance made a hostile takeover bid for Warner Bros. Discovery for $108 billion US just days after Netflix announced it made a $72-billion US deal with the legacy studio. It’s a move that even has U.S. President Donald Trump weighing in.
Netflix co-CEOs Ted Sarandos and Greg Peters welcomed Warner Bros.’ decision on Wednesday, saying it recognizes the streaming giant’s deal “as the superior proposal that will deliver the greatest value to its stockholders, as well as consumers, creators and the broader entertainment industry.”
Paramount did not immediately respond to a request for comment.
Late last month, Paramount announced an “irrevocable personal guarantee” from Oracle founder Larry Ellison — the father of Paramount CEO David Ellison — to back $40.4 billion in equity financing for the company’s offer. Paramount also increased its promised payout to shareholders to $5.8 billion if the deal is blocked by regulators, matching what Netflix already put on the table.
The battle for Warner and the value of each offer grows complicated because Netflix and Paramount want different things. Netflix’s proposed acquisition includes only Warner’s studio and streaming business, including its legacy TV and movie production arms and platforms like HBO Max.
But Paramount wants the entire company — which, beyond studio and streaming, includes networks like CNN and Discovery.
If Netflix is successful, Warner’s news and cable operations would be spun off into their own company, under a previously announced separation.
A merger with either company will attract tremendous antitrust scrutiny. Due to its size and potential impact, it will almost certainly trigger a review by the U.S. Justice Department, which could sue to block the transaction or request changes. Other countries and regulators overseas may also challenge the merger.
