Warner Bros. Discovery’s board has once again turned down a takeover offer from Paramount and advised shareholders to stick with a competing proposal from Netflix. In a communication to shareholders, Warner Bros.’ board cautioned against Paramount’s revised $108.4-billion US hostile bid, labeling it as a risky leveraged buyout that investors should decline. The board emphasized that Paramount’s bid relies heavily on debt financing, increasing the risk of completion, and reaffirmed its support for Netflix’s $82.7-billion deal for the film and television studio and other assets.
According to Warner Bros. Discovery chair Samuel Di Piazza Jr., “Our binding agreement with Netflix will provide superior value with greater certainty, avoiding the significant risks and costs associated with Paramount’s offer for our shareholders.” Paramount and Netflix have been competing for control of Warner Bros., aiming to acquire its esteemed film and television studios and vast content library, which includes popular franchises such as Harry Potter, Game of Thrones, Friends, and the DC Comics universe, along with classic films like Casablanca and Citizen Kane.
Warner’s leadership has consistently rebuffed Paramount’s bids, advocating for 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, as well as increased its payout to shareholders to $5.8 billion if the deal faces regulatory obstacles, aligning it with Netflix’s offer.
The board of Warner Bros. issued a letter alongside a 67-page amended merger filing, outlining the rationale for rejecting Paramount’s bid. While recognizing some improvements in Paramount’s revised offer, the board highlighted the substantial drawbacks compared to the Netflix deal. Netflix’s co-CEOs commended Warner Bros.’ decision, emphasizing their deal as the superior proposal delivering the most value to stockholders, consumers, creators, and the entertainment industry at large.
Paramount’s hostile bid remains active, with Warner shareholders having until Jan. 21 to “tender” their shares. The complexity of the battle for Warner arises from differing objectives between Netflix and Paramount. Netflix seeks to acquire Warner’s studio and streaming business, while Paramount aims for the entire company, encompassing networks like CNN and Discovery beyond studio and streaming operations.
Regardless of the outcome, a merger with either company will face intense antitrust scrutiny, potentially triggering reviews by regulatory bodies like the U.S. Justice Department and overseas authorities. Political considerations, particularly under the influence of U.S. President Donald Trump, add another layer of uncertainty to the deal’s fate. The impact of the acquisition on the entertainment industry, including movie production, distribution channels, and news media landscape, is expected to be profound.