Warner Bros. Discovery’s board has once again turned down a bid from Paramount and advised shareholders to support Netflix’s competing offer. In a communication to shareholders, Warner Bros.’ board characterized Paramount’s revised $108.4 billion US hostile bid as a risky leveraged buyout that investors should decline. The board expressed concerns about the significant debt financing associated with Paramount’s offer, emphasizing the risks involved in closing the deal. Warner Bros.’ commitment to Netflix’s $82.7 billion deal for the film and television studio and other assets was reaffirmed as offering superior value with greater certainty and without the potential risks and costs of Paramount’s proposal.
The battle for control of Warner Bros. has intensified between Paramount and Netflix, both eager to acquire the esteemed film and television studios and vast content library. Warner Bros.’ valuable entertainment franchises, including “Harry Potter,” “Game of Thrones,” “Friends,” and the DC Comics universe, along with classic films like “Casablanca” and “Citizen Kane,” have made it a sought-after acquisition target.
Despite Paramount’s persistent bids, Warner’s leadership continues to reject them, advocating for shareholders to support the sale of the streaming and studio business to Netflix. Paramount recently secured an “irrevocable personal guarantee” from Oracle founder Larry Ellison to back $40.4 billion in equity financing for their offer. Paramount has also increased its promised payout to shareholders to $5.8 billion if the deal faces regulatory obstacles, matching Netflix’s offering.
Warner Bros.’ board informed shareholders that Paramount’s financing plan would burden the smaller Hollywood studio with $87 billion in debt post-acquisition, marking it as the largest leveraged buyout in history. The board detailed its reasons for declining Paramount’s offer in a 67-page amended merger filing, citing significant costs associated with Paramount’s bid compared to the Netflix deal.
Netflix’s co-CEOs, Ted Sarandos and Greg Peters, welcomed Warner Bros.’ decision, praising the streaming giant’s deal as the superior proposal that will provide the most value to stockholders, consumers, creators, and the broader entertainment industry. Paramount has not yet responded to requests for comment, and their hostile bid remains active, with Warner shareholders having until Jan. 21 to decide on tendering their shares.
The battle for Warner Bros. becomes intricate as Netflix and Paramount have differing objectives. While Netflix is focused on acquiring Warner’s studio and streaming business, Paramount seeks to acquire the entire company, including networks like CNN and Discovery. The impending merger with either company is expected to face rigorous antitrust scrutiny, possibly triggering reviews by the U.S. Justice Department and other regulators worldwide. The involvement of politics, particularly under U.S. President Donald Trump, is anticipated, as the impact of the deal on the entertainment industry, movie production, distribution channels, and news media environment could be substantial.
