Thursday, January 8, 2026 - The board of Warner Bros. Discovery (WBD) has once again rejected Paramount’s revised takeover bid, reaffirming its preference for an existing deal with Netflix and warning shareholders that Paramount’s proposal remains “too risky.”
In a letter to shareholders on Wednesday, January 7, the WBD
board described Paramount’s latest offer as “inadequate” and fraught with
uncertainty, despite claims by Paramount that it had addressed key concerns
raised by Warner Bros. executives.
According to the board, Paramount’s bid closely resembles a
leveraged buyout, relying heavily on borrowed funds to complete the
transaction. Paramount, which is significantly smaller than WBD, would need to
take on more than $50 billion in additional debt through multiple financing
arrangements to acquire the company.
“This structure poses materially more risk for WBD and its
shareholders,” the board said, contrasting it with what it called the
“certainty” of the Netflix merger.
Paramount has attempted to ease concerns about its financing
by highlighting the backing of Oracle billionaire Larry Ellison, who is helping
bankroll the proposed takeover. His son, David Ellison, Paramount’s chief
executive, sparked the bidding war last year with an unsolicited approach for
WBD’s assets, including CNN.
Following that bid, WBD, led by CEO David Zaslav, launched a
formal auction process and ultimately accepted Netflix’s offer, valued at
$27.75 per share. The deal includes $23.25 in cash, with the remainder in
Netflix stock.
Paramount later went public with a higher offer of $30 per
share after being rebuffed by the WBD board. However, the board has continued
to insist that Paramount’s proposal is inferior, citing both the scale of the
debt involved and what it described as onerous conditions attached to the
offer.
Another key issue raised by WBD is the value of its cable
television assets, which are not included in the Netflix deal. These assets,
including CNN, are set to be spun off into a separate publicly traded company,
Discovery Global, later this year. While the WBD board believes Discovery
Global could hold significant standalone value, Paramount has reportedly valued
the unit at just $1 per share.
When Paramount first launched its hostile bid, WBD dismissed
the proposal as “illusory” and raised concerns about its financing, some of
which was expected to come from investors linked to Saudi Arabia, Qatar and Abu
Dhabi.
In response, Paramount announced on December 22 that Larry
Ellison would personally guarantee the $40.4 billion he is contributing toward
the proposed $78 billion transaction. Paramount also increased its breakup fee
to $5.8 billion, matching Netflix’s agreed penalty, but did not raise its
$30-per-share offer.
With the board’s latest rejection, Paramount now faces a
choice: walk away, increase its bid, or take the fight directly to WBD
shareholders. Because the offer is hostile, Paramount could still seek a
shareholder vote that might override the board’s recommendation if investors
find the proposal more attractive.
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