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U.S.-based entertainment broadcaster Warner Bros. Discovery announced on Wednesday that it has rejected the $108.4 billion hostile tender offer from Paramount Skydance, stating that the bid lacks secured financing and does not offer a more attractive alternative to its existing merger agreement with Netflix.
The company’s board of directors reiterated its unanimous support for the Netflix deal, which it says offers stronger value and fewer risks for shareholders, with the offer amounting to $72 billion in a transaction that totals $82.7 billion in enterprise value.
After the news, Warner Bros. shares listed on the New York Stock Exchange (NYSE) fell by 1.5%, Paramount shares declined by 1.8%, and Netflix gained 1.5% in pre-market trading.
In a letter to shareholders, Warner Bros. Discovery criticized Paramount’s claim that its $108.4 billion offer is fully backed by the Ellison family. The board said there is no binding commitment from the family despite repeated requests. Instead, the funding depends on a revocable trust controlled by Larry Ellison, which is described as "unknown and opaque," with assets that can be moved at any time.
Warner Bros. also noted that the trust’s liability is capped at 7%—or $2.8 billion—of the proposed value, a limitation it called risky for a transaction of this scale.
The board stated that Paramount’s offer is not a binding merger agreement and can be changed before closing. It also raised concerns about the 12- to 18-month timeline for regulatory approvals, saying the deal cannot realistically be completed by its current expiration date.
By contrast, the Netflix merger, announced on December 5, is a binding agreement with confirmed financing. It offers $23.25 in cash and $4.50 in Netflix stock per WBD share, plus equity in Discovery Global, a company to be spun off after the merger.
The board described Paramount’s offer as "illusory," arguing it is not a binding merger agreement and can be changed or withdrawn at any time. It also raised concerns about the 12- to 18-month timeline needed for regulatory approvals, saying the offer cannot realistically be completed within the current expiration window.
By contrast, the Netflix deal, announced on Dec. 5, is a binding agreement with secured financing. It offers $23.25 in cash and $4.50 in Netflix stock per WBD share, plus equity in Discovery Global, a company to be spun off after the merger.
Warner Bros. also rejected suggestions that the Netflix merger carries greater regulatory risk. It said both deals face similar approval processes but noted that Netflix agreed to a higher $5.8 billion regulatory termination fee, compared to Paramount’s $5 billion. The board also emphasized Netflix’s stronger financial profile, including its investment-grade credit rating and market cap exceeding $400 billion.
If Warner Bros. abandons the Netflix deal in favor of Paramount’s offer, the board warned that shareholders could face at least $4.3 billion in extra costs, including a $2.8 billion break fee and $1.5 billion in lost debt-related benefits. Paramount has not committed to covering these costs, which the board estimated at $1.66 per share.
Citing "repeated deficiencies" across six previous proposals, the board said none of Paramount’s offers surpassed the Netflix terms, recommending that shareholders reject Paramount’s current bid and continue to support the Netflix merger.
Warner Bros. Discovery is a U.S.-based global media and entertainment company formed through the 2022 merger of WarnerMedia and Discovery, owning a wide range of brands and assets, including Warner Bros. Pictures, HBO, CNN, DC Studios, Discovery Channel, TLC and the Max streaming platform.
The company produces and distributes films, television shows, and streaming content, with titles such as the Harry Potter and The Batman film franchises, HBO series like Succession and The Last of Us, as well as documentaries and reality programming through the Discovery Channel and TLC.
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