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 recent communication to shareholders, Warner Bros.’ board characterized Paramount’s revised $108.4 billion US hostile bid as a risky leveraged buyout that investors should not accept. The board highlighted the significant debt financing required by Paramount’s offer, emphasizing the heightened risk involved in completing the transaction. Warner Bros. reaffirmed its commitment to Netflix’s $82.7 billion deal, stating that it provides superior value with greater certainty and without the substantial risks and costs associated with Paramount’s proposal.
The battle for control over Warner Bros. has been intensifying between Paramount and Netflix, both aiming to acquire the esteemed film and television studios and vast content library of the company. Warner Bros. holds valuable entertainment franchises such as “Harry Potter,” “Game of Thrones,” “Friends,” and the DC Comics universe, along with classic films like “Casablanca” and “Citizen Kane.”
Despite Paramount’s persistent bids, Warner’s leadership continues to reject them, urging shareholders to support the sale of the streaming and studio business to Netflix. Paramount recently secured an “irrevocable personal guarantee” from Larry Ellison, the father of Paramount CEO David Ellison, to back $40.4 billion in equity financing for their offer. If the deal faces regulatory obstacles, Paramount has promised to pay shareholders $5.8 billion, matching Netflix’s offer.
Warner Bros.’ board rejected Paramount’s $30-per-share cash offer after analyzing the amended proposal on December 23. While acknowledging some improvements, such as Ellison’s guarantee and a higher reverse termination fee, the board cited substantial costs associated with Paramount’s bid compared to Netflix’s proposal in a 67-page amended merger filing.
Netflix’s co-CEOs welcomed Warner Bros.’ decision, emphasizing their deal as the superior choice that will deliver the most value to stakeholders, consumers, creators, and the entertainment industry. As of now, Paramount’s hostile bid remains active, giving Warner shareholders until January 21 to decide on tendering their shares.
The complexity of the situation arises from differing objectives as Netflix seeks only Warner’s studio and streaming business, including platforms like HBO Max, while Paramount aims for the entire company, encompassing networks like CNN and Discovery. Potential antitrust scrutiny looms over any merger due to its significant impact, potentially triggering reviews by the U.S. Justice Department and overseas regulators. Additionally, political considerations, especially under U.S. President Donald Trump, could influence the outcome of the deal, impacting the entertainment industry and news media landscape.