Warner Bros Discovery Board Rejects Paramount–Skydance’s $108 Billion Hostile Bid
GeokHub
Contributing Writer
LOS ANGELES — Dec 17 (geokHub) The board of Warner Bros Discovery (WBD) has formally rejected a $108.4 billion hostile takeover bid from Paramount–Skydance, citing what it described as insufficient and risky financing assurances, according to a regulatory filing released on Wednesday.
In a letter to shareholders, Warner Bros Discovery said Paramount had misrepresented the strength of its financing, repeatedly claiming that its $30-per-share cash offer was fully guaranteed by the Ellison family, led by Oracle founder Larry Ellison.
“It does not, and never has,” the board wrote, arguing that the proposal carried “numerous, significant risks” for shareholders.
Board Says Paramount Offer Falls Short of Netflix Deal
The Warner Bros Discovery board said it viewed Paramount’s proposal as inferior to its existing binding merger agreement with Netflix, which values the company’s film and television studios — including its content library and HBO Max streaming service — at $27.75 per share.
According to the board, Netflix’s offer requires no equity financing, comes with firm debt commitments, and is backed by a company with a market capitalization of more than $400 billion and an investment-grade balance sheet.
Neither Paramount nor Netflix immediately responded to requests for comment.
In early trading, Warner Bros Discovery shares slipped 0.5%, while Netflix shares rose 1.7% and Paramount fell 2.2%.
Questions Raised Over Paramount’s Financing Structure
Paramount has submitted six separate bids to acquire Warner Bros Discovery, arguing last week that it had secured “air-tight financing,” including $41 billion in equity backing from the Ellison family and RedBird Capital, alongside $54 billion in debt commitments from major lenders.
However, Warner Bros Discovery countered that Paramount’s most recent offer relied on backing from an “opaque” Lawrence J. Ellison Revocable Trust, whose assets and liabilities are not publicly disclosed and can be changed or withdrawn at any time.
“A revocable trust is no replacement for a secured commitment by a controlling shareholder,” the board wrote, adding that the Ellison family declined to fully backstop the offer despite repeated requests.
Concerns Over Debt, Credit Rating and Operational Impact
The board also raised concerns about Paramount’s financial strength, noting that the company has a market value of roughly $15 billion and a credit rating just above junk status.
If the deal were completed, Paramount’s debt would rise to 6.8 times operating income, with “virtually no current free cash flow,” according to the filing. Warner Bros Discovery also warned that Paramount’s proposed financing structure exposed shareholders to significant downside risk.
In contrast, Netflix said it would continue releasing Warner Bros films in cinemas, addressing fears that the deal could reduce theatrical film output.
Job Cuts and Regulatory Risk Also Flagged
Warner Bros Discovery criticized Paramount’s plan to achieve $9 billion in cost synergies, describing it as operationally ambitious and likely to result in another wave of job losses that “would make Hollywood weaker, not stronger.”
The board also rejected Paramount’s claims of unfair treatment, saying it held dozens of meetings and calls with Paramount executives, including in-person discussions with Warner Bros CEO David Zaslav and Paramount executives.
After evaluating regulatory risks, Warner Bros Discovery said it believes both the Netflix and Paramount deals could secure approvals, but emphasized that Netflix’s offer includes a higher $5.8 billion break-up fee, compared with Paramount’s $5 billion.
The board described Paramount’s proposal as “illusory,” noting it could be altered or withdrawn before completion, unlike the binding Netflix agreement.
“The PSKY offer provides an untenable degree of risk and potential downside for WBD shareholders,” the board concluded.
