Warner Bros. Discovery’s board has once again turned down a bid from Paramount and advised shareholders to support a competing offer from Netflix. In a communication to shareholders, Warner Bros.’ board criticized Paramount’s revised $108.4 billion US hostile bid as a risky leveraged buyout that investors should decline. The board highlighted the significant debt financing required by Paramount’s offer, which poses potential risks to closing the deal. Warner Bros.’ board reiterated its endorsement of Netflix’s $82.7 billion deal for the film and television studio and other assets, emphasizing that it provides better value with greater certainty and lower risks and costs for shareholders. Samuel Di Piazza Jr., the chair of Warner Bros. Discovery, stated that the binding agreement with Netflix is more favorable than Paramount’s offer.
The battle for control of Warner Bros. has seen Paramount and Netflix competing to acquire the renowned film and television studios, along with a vast content library that includes popular franchises like “Harry Potter,” “Game of Thrones,” “Friends,” and the DC Comics universe, as well as classic films such as “Casablanca” and “Citizen Kane.” Despite Paramount’s persistent bids, Warner’s leadership has continuously rejected them, advocating for shareholders to support the sale of the streaming and studio business to Netflix.
Paramount recently announced financial backing from Oracle founder Larry Ellison to support its equity financing for the bid. However, Warner Bros.’ board expressed concerns about the substantial debt burden that Paramount’s financing plan would impose on the Hollywood studio post-acquisition, labeling it as the largest leveraged buyout in history. The board outlined its reasons for rejecting Paramount’s offer in a 67-page amended merger filing, emphasizing the drawbacks compared to the Netflix deal.
Following Warner Bros.’ decision to stick with Netflix, the streaming giant’s co-CEOs, Ted Sarandos and Greg Peters, hailed the move as recognizing their deal as the superior proposal delivering the greatest value to stockholders, consumers, creators, and the entertainment industry at large. Paramount has not yet responded to the development, and their hostile bid remains active, with Warner shareholders having until Jan. 21 to decide whether to “tender” their shares.
The complexity of the situation arises from differing objectives between Netflix and Paramount. While Netflix’s proposal focuses on acquiring Warner’s studio and streaming business, Paramount seeks control of the entire company, including networks like CNN and Discovery, beyond studio and streaming operations. The potential merger with either company is expected to face rigorous antitrust scrutiny, potentially triggering reviews by regulatory bodies like the U.S. Justice Department and counterparts abroad. Political considerations, particularly under the administration of U.S. President Donald Trump, further add to the uncertainty surrounding the deal’s approval. The implications of either acquisition would reverberate throughout the entertainment industry, influencing movie production, distribution channels, and the news media landscape.