Warner Bros. Discovery’s board has once again turned down a bid from Paramount and is advising shareholders to stick with an offer from Netflix. In a letter to shareholders, Warner Bros.’ board expressed concerns about Paramount’s revised $108.4 billion US hostile bid, labeling it a risky leveraged buyout that investors should decline. The board highlighted the high level of debt financing required by Paramount’s offer, increasing the risk of completion, and reiterated its support for Netflix’s $82.7 billion deal for the film and television studio and other assets.
Warner Bros. holds valuable entertainment franchises like “Harry Potter,” “Game of Thrones,” “Friends,” and the DC Comics universe, along with classic films such as “Casablanca” and “Citizen Kane.” The company has consistently rejected Paramount’s bids and encouraged shareholders to endorse the sale of the streaming and studio business to Netflix.
Paramount recently secured an “irrevocable personal guarantee” from Oracle founder Larry Ellison to support $40.4 billion in equity financing for its offer. The company also raised its proposed payout to shareholders to $5.8 billion if the deal faces regulatory obstacles, matching Netflix’s offer. However, Warner Bros.’ board pointed out that Paramount’s financing plan would burden the smaller studio with $87 billion in debt post-acquisition, making it the largest leveraged buyout ever.
In response to Warner Bros.’ decision, Netflix’s co-CEOs praised the streaming giant’s deal as the superior proposal that would provide the most value to stakeholders, consumers, creators, and the entertainment industry at large. Despite the rejection, Paramount’s hostile bid remains active, with Warner shareholders having until Jan. 21 to decide whether to “tender” their shares.
The battle for Warner’s ownership becomes complex as Netflix and Paramount have different acquisition goals. While Netflix is interested in acquiring Warner’s studio and streaming business, Paramount seeks to acquire the entire company, encompassing networks like CNN and Discovery. The potential merger with either company is likely to face intense antitrust scrutiny, requiring approval from multiple regulatory bodies, including the U.S. Justice Department.
The involvement of U.S. President Donald Trump in the deal approval process adds a political dimension to the situation. The outcome of either deal will have far-reaching implications for the entertainment industry, affecting movie production, distribution channels, and the news media landscape.