In a major development shaking the global media landscape, Warner Bros. Discovery has formally rejected a renewed takeover proposal from rival Paramount Global. The company's board has advised its shareholders to instead support a previously announced $72 billion transaction with streaming giant Netflix.
Board Rejects Paramount's "Insufficient" Offer
In a statement released on Wednesday, the Warner Bros. Discovery board declared that Paramount's latest proposal "is not in the best interests of the company or its shareholders." The board has reiterated its recommendation for investors to back the binding agreement with Netflix.
Samuel Di Piazza Jr., Chair of Warner Bros. Discovery, criticised the Paramount bid. He stated it provides "insufficient value" and involves an "extraordinary amount of debt financing" that creates risks. He also highlighted a lack of protections for shareholders if the deal were to fall through.
"Our binding agreement with Netflix will offer superior value at greater levels of certainty, without the significant risks and costs Paramount's offer would impose on our shareholders," Di Piazza said.
The Battle of the Bids: Scope and Scale
The two competing offers differ sharply in both value and scope. Paramount, which is controlled by Skydance Media, has made a hostile bid to acquire the entire Warner Bros. Discovery company for approximately $77.9 billion.
In contrast, Netflix's proposal, valued at $72 billion, is focused solely on acquiring Warner's studio and streaming assets. This includes its legacy film and television production units and platforms like HBO Max.
To strengthen its offer, Paramount announced an irrevocable personal guarantee from Oracle founder Larry Ellison to back $40.4 billion in equity financing. It also matched Netflix's break fee, promising a $5.8 billion payout to Warner shareholders if regulators block the deal.
Concerns Over Debt and Regulatory Hurdles
Warner Bros. Discovery has expressed significant concerns to its shareholders about the nature of Paramount's proposal. In a letter, the company flagged that the offer resembles a leveraged buyout, laden with heavy debt and featuring a longer closing timeline of 12 to 18 months, which increases execution risk.
Furthermore, any deal of this magnitude is expected to face intense antitrust scrutiny in the United States and overseas. Regulators will closely examine the impact on competition within the already consolidated global media and streaming industry.
If the transaction with Netflix proceeds, Warner's news and cable networks, including CNN and Discovery, would be spun off into a separate entity under a previously announced plan. Paramount's bid, however, aims to take over the whole conglomerate.
This high-stakes corporate drama underscores the fierce competition and rapid consolidation occurring in the entertainment sector as companies vie for scale and content supremacy in the streaming era.
