Warner Bros. Discovery’s board has once again turned down a bid from Paramount and advised shareholders to stick with an offer from Netflix. In a communication to shareholders, Warner Bros.’ board expressed concerns over Paramount’s revised $108.4 billion US hostile bid, labeling it as a risky leveraged buyout that investors should decline. The board highlighted that Paramount’s proposal heavily relies on debt financing, increasing the risk of successful closure. Warner Bros. reiterated its support for Netflix’s $82.7 billion deal for the film and television studio and other assets, emphasizing that the agreement provides superior value with greater certainty and fewer risks and costs for shareholders.
The battle between Paramount and Netflix for control over Warner Bros. and its valuable film and television studios, along with its extensive content library featuring iconic franchises like Harry Potter, Game of Thrones, Friends, and DC Comics, continues. Warner’s leadership has persistently rejected Paramount’s bids, urging shareholders to endorse the sale of the streaming and studio business to Netflix instead. Paramount recently secured an “irrevocable personal guarantee” from Oracle founder Larry Ellison to support $40.4 billion in equity financing for its offer. Paramount also increased its proposed payout to shareholders to $5.8 billion if regulatory hurdles block the deal, matching Netflix’s offer.
Paramount’s financing strategy would burden the smaller Hollywood studio with $87 billion in debt post-acquisition, marking it as the largest leveraged buyout in history, according to Warner Bros.’ board. The board shared its decision to vote against Paramount’s $30-per-share cash offer in a 67-page amended merger filing, outlining the reasons for rejecting the bid. Netflix co-CEOs Ted Sarandos and Greg Peters welcomed Warner Bros.’ decision, emphasizing the streaming giant’s deal as the superior proposal delivering the most value to stockholders, as well as consumers, creators, and the wider entertainment industry.
While Netflix’s proposed acquisition focuses on Warner’s studio and streaming business, including platforms like HBO Max, Paramount aims for the entire company, encompassing networks like CNN and Discovery. The complexity of the offers and the differing objectives of Netflix and Paramount add layers to the ongoing battle for Warner. The potential merger with either company is anticipated to face intense antitrust scrutiny, likely prompting reviews by regulatory bodies like the U.S. Justice Department and overseas authorities. Political considerations, including the influence of U.S. President Donald Trump, are also expected to impact the outcome of the deal, which could have far-reaching consequences for the entertainment industry, affecting movie production, distribution channels, and the news media landscape.