Warner Bros. Discovery’s board has once again turned down a takeover offer from Paramount and advised shareholders on Wednesday to stick with a competing bid from Netflix. In a message to shareholders, Warner Bros.’ board characterized Paramount’s updated $108.4 billion US hostile bid as a risky leveraged buyout that investors should decline. The board highlighted that Paramount’s offer heavily relies on debt financing, increasing the risk of completion, and reaffirmed its commitment to Netflix’s $82.7 billion deal for the film and television studio and other assets. Warner Bros. Discovery chair Samuel Di Piazza Jr. emphasized that the binding agreement with Netflix provides superior value with greater certainty and lower risks and costs compared to Paramount’s proposal.
Paramount and Netflix have been in a heated competition to acquire Warner Bros., known for its valuable film and television studios and extensive content library, which includes popular franchises like Harry Potter, Game of Thrones, Friends, and the DC Comics universe, as well as classic films such as Casablanca and Citizen Kane. Warner’s leadership has consistently rejected Paramount’s bids and has encouraged shareholders to support the sale of the streaming and studio business to Netflix.
Last month, Paramount announced an “irrevocable personal guarantee” from Oracle founder Larry Ellison to secure $40.4 billion in equity financing for their offer. Paramount also raised its promised payout to shareholders to $5.8 billion if the deal faces regulatory obstacles, matching Netflix’s offer. However, Warner Bros.’ board informed shareholders that Paramount’s financing plan would burden the smaller studio with $87 billion in debt post-acquisition, making it the largest leveraged buyout in history. The board detailed its reasons for turning down Paramount’s offer in a 67-page amended merger filing, highlighting the significant costs associated with Paramount’s bid compared to Netflix’s proposal.
Netflix’s co-CEOs, Ted Sarandos and Greg Peters, welcomed Warner Bros.’ decision, stating that it acknowledges Netflix’s deal as the superior proposal delivering the most value to stockholders, consumers, creators, and the entertainment industry at large. Paramount has not yet responded to requests for comment, and their hostile bid remains active, with Warner shareholders having until Jan. 21 to tender their shares.
The battle for Warner and the evaluation of each offer become complex as Netflix and Paramount have different objectives. Netflix’s proposed acquisition focuses on Warner’s studio and streaming business, including its TV and movie production arms and platforms like HBO Max. In contrast, Paramount seeks to acquire the entire company, which includes networks like CNN and Discovery. If Netflix’s bid succeeds, Warner’s news and cable operations would be spun off into a separate entity, following a previously announced separation.
A merger with either company will attract significant antitrust scrutiny, likely triggering a review by the U.S. Justice Department and other regulators worldwide. The involvement of U.S. President Donald Trump is anticipated, as he has hinted at personal intervention in the deal’s approval process. Both deals would have far-reaching implications for the entertainment industry, affecting movie production, distribution channels, and the news media landscape.