{"id":499016,"date":"2026-01-07T13:45:11","date_gmt":"2026-01-07T13:45:11","guid":{"rendered":"https:\/\/www.europesays.com\/us\/499016\/"},"modified":"2026-01-07T13:45:11","modified_gmt":"2026-01-07T13:45:11","slug":"warner-bros-discovery-rejects-paramounts-latest-takeover-offer","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/499016\/","title":{"rendered":"Warner Bros. Discovery Rejects Paramount’s Latest Takeover Offer"},"content":{"rendered":"

\n\tThe song remains the same: Warner Bros. Discovery<\/a> has turned down the latest acquisition offer by David Ellison\u2019s Paramount Skydance<\/a>, and WBD\u2019s board is continuing to back the company\u2019s deal with Netflix.<\/p>\n

\n\tOn Wednesday, WBD officially responded to Paramount\u2019s latest $30\/share all-cash bid for all of Warner Bros. Discovery \u2014 its eighth takeover offer to date. <\/p>\n

\n\tParamount Skydance\u2019s offer \u201cis not more favorable to WBD stockholders than the Netflix Merger and continues to be inadequate,\u201d including because of its \u201cinsufficient value, taking into account price and numerous risks, costs and uncertainties,\u201d WBD said in an SEC filing, referring to Paramount Skydance by its ticker symbol \u201cPSKY.\u201d<\/p>\n

\n\tThe WBD board reiterated its belief that Paramount\u2019s proposal is much riskier and questioned Paramount\u2019s ability to close such a deal. The board\u2019s letter also noted that Paramount\u2019s offer is nonbinding: \u201cThe Offer is entirely at PSKY\u2019s discretion \u2013 PSKY can reduce the price, impose new conditions, or walk away entirely at any time prior to its acceptance of tendered shares,\u201d WBD said in the filing.<\/p>\n

\n\tWBD has repeatedly rebuffed Paramount Skydance\u2019s takeover overtures. On Dec. 17,\u00a0WBD\u2019s board rejected Paramount\u2019s seventh offer<\/a>, maintaining the Netflix deal is better.<\/p>\n

\n\tIn its Jan. 7 letter to shareholders, the board of WBD called into question Paramount Skydance\u2019s ability to close its proposed deal. \u201cPSKY is a company with a $14 billion market capitalization attempting an acquisition requiring $94.65 billion of debt and equity financing, nearly seven times its total market capitalization,\u201d the WBD letter says. \u201cTo effect the transaction, it intends to incur an extraordinary amount of incremental debt \u2013 more than $50 billion \u2013 through arrangements with multiple financing partners.\u201d <\/p>\n

\n\tIn contrast, according to the WBD board\u2019s letter, \u201cNetflix is a company with a market capitalization of approximately $400 billion, an investment grade balance sheet, an A\/A3 credit rating and estimated free cash flow of more than $12 billion for 2026. The merger agreement with Netflix also provides WBD with more flexibility to operate in a normal course until closing. Given these factors, the Board determined that the Netflix merger remains superior to PSKY\u2019s amended offer.\u201d<\/p>\n

\n\tDavid Ellison\u2019s Paramount Skydance on Dec. 22 had updated its offer to acquire for WBD<\/a> for $30\/share with certain new provisions. Among those,\u00a0Larry Ellison (David\u2019s multibillionaire father)\u00a0made an \u201cirrevocable personal guarantee of $40.4 billion\u201d toward Paramount\u2019s all-cash offer for WBD<\/a>.\u00a0Paramount also upped its breakup fee to match Netflix\u2019s $5.8 billion figure, payable to WBD in the event that its deal does not clear regulatory review.<\/p>\n

\n\tBut WBD\u2019s board was not swayed. Among other things, it said, the $5.8 billion regulatory termination fee from Paramount would be reduced to $1.1 billion \u2014 because WBD would be on the hook to pay the $2.8 billion upfront termination fee to Netflix, while it would also have $1.5 billion in financing costs and $350 million incremental interest expense. In addition, \u201cPSKY\u2019s proposed restrictions on WBD\u2019s ability to refinance its $15 billion bridge loan would result in additional expense and business risk,\u201d WBD said.<\/p>\n

\n\t\u201cPSKY has repeatedly failed to submit the best proposal for WBD shareholders despite clear direction from WBD on both the deficiencies and potential solutions,\u201d the WBD board\u2019s Jan. 7 letter says. \u201cYet PSKY has continued to submit offers that still include many of the deficiencies we previously repeatedly identified to PSKY, none of which are present in the Netflix merger agreement, all while asserting that its offers do not represent its \u2018best and final\u2019 proposal.\u201d<\/p>\n

\n\tThe hostile takeover effort initiated by David Ellison came after WBD\u2019s board entered into an agreement with Netflix in an $83 billion deal<\/a>\u00a0to buy Warner Bros.\u2019s studios and HBO Max businesses. Netflix\u2019s cash and stock transaction, announced Dec. 5, is valued at $27.75\/share of WBD. That would take place following the planned spin-off of TV-centric entity Discovery Global, set for the third quarter of 2026. WBD shareholders would retain stock in Discovery Global under the Netflix pact.<\/p>\n

\n\tHere is the letter from Warner Bros. Discovery board to shareholders issued Wednesday:<\/p>\n

\n\tDear Fellow Shareholders,<\/p>\n

\n\tAs you know, at the end of last year, your Board of Directors concluded its process to maximize shareholder value by entering into our merger agreement with Netflix. Since then, Paramount Skydance (\u201cPSKY\u201d), a bidder in that process, has commenced a hostile tender offer to acquire WBD which it recently amended on December 22, 2025.<\/p>\n

\n\tAs described further below, your Board unanimously determined that the PSKY amended offer remains inadequate particularly given the insufficient value it would provide, the lack of certainty in PSKY\u2019s ability to complete the offer, and the risks and costs borne by WBD shareholders should PSKY fail to complete the offer. Accordingly, the Board unanimously recommends that shareholders not tender your shares into the PSKY offer. For a full discussion of the reasons for the Board\u2019s recommendation, we urge you to read the full 14D-9 filing.<\/p>\n

\n\tPSKY Offer\u2019s Insufficient Value<\/p>\n

\n\tPSKY\u2019s offer is inferior given significant costs, risks and uncertainties as compared to the Netflix merger. Under the Netflix merger agreement, WBD shareholders will receive significant value with $23.25 in cash and shares of Netflix common stock representing a target value of $4.50 based on a collar range in the Netflix stock price at the time of closing, which may have substantial upside.<\/p>\n

\n\tAdditionally, WBD shareholders will receive value through their ownership in Discovery Global, which will have considerable scale, a diverse global footprint, and leading sports and news assets, as well as the strategic and financial flexibility to pursue its own growth initiatives and value creation opportunities.<\/p>\n

\n\tThe Board also considered the costs and loss of value for WBD shareholders associated with accepting the PSKY offer. WBD would be obligated to pay Netflix a $2.8 billion termination fee for abandoning our merger agreement; incur a $1.5 billion fee for failing to complete our debt exchange, which we could not execute under the PSKY offer; and incur incremental interest expense of approximately $350 million. The total cost to WBD would be approximately $4.7 billion, or $1.79 per share. These costs would in effect lower the net amount of the regulatory termination fee that PSKY would pay to WBD from $5.8 billion to $1.1 billion in the event of a failed transaction with PSKY due to regulatory reasons. In comparison, the Netflix transaction imposes none of these costs on WBD.<\/p>\n

\n\tLack of Certainty in PSKY\u2019s Ability to Close the Transaction<\/p>\n

\n\tThe extraordinary amount of debt financing as well as other terms of the PSKY offer heighten the risk of failure to close, particularly when compared to the certainty of the Netflix merger. PSKY is a company with a $14 billion market capitalization attempting an acquisition requiring $94.65 billion of debt and equity financing, nearly seven times its total market capitalization. To effect the transaction, it intends to incur an extraordinary amount of incremental debt \u2013 more than $50 billion \u2013 through arrangements with multiple financing partners.<\/p>\n

\n\tThe transaction PSKY is proposing is in effect a leveraged buyout (\u201cLBO\u201d). In fact, it would be the largest LBO in history with $87 billion of total pro forma gross debt and an estimated gross leverage of approximately 7x 2026E EBITDA before synergies. The WBD Board considered that an LBO structure introduces risks given the acquiror\u2019s reliance on the ability and willingness of its lenders to provide funds at close. Changes in the performance or financial condition of either the target or acquiror, as well as changes in the industry or financing landscapes, could jeopardize these financing arrangements. Many prior large LBOs illustrate that acquirors or their equity and\/or debt financing sources can, and do, seek to assert failures of closing conditions in order to terminate a transaction or renegotiate transaction terms. This aggressive transaction structure poses materially more risk for WBD and its shareholders when compared to the conventional structure of the Netflix merger.<\/p>\n

\n\tThe risks inherent in the LBO structure are exacerbated by the amount of debt PSKY must incur, its current financial position and future prospects, as well as the lengthy period to close the transaction \u2013 which PSKY itself estimates to be 12-18 months following signing. PSKY already has a \u201cjunk\u201d credit rating and it has negative free cash flows with a high degree of dependency on its legacy linear business. Certain fixed obligations that PSKY has incurred or may incur prior to closing, such as the multi-year programming and sports licensing deals, could further strain its financial condition.<\/p>\n

\n\tFurther, the operating restrictions between signing and closing imposed on WBD by the PSKY offer could damage our business, allowing PSKY to abandon the offer. The onerous covenants include, among others, restricting WBD\u2019s ability to modify, renew or terminate affiliation agreements. These restrictions may hamper WBD\u2019s ability to perform and could lead PSKY to assert that WBD has suffered a \u201cmaterial adverse effect,\u201d enabling PSKY and its financing partners to terminate the transaction or renegotiate the terms of the transaction.<\/p>\n

\n\tIn contrast, Netflix is a company with a market capitalization of approximately $400 billion, an investment grade balance sheet, an A\/A3 credit rating and estimated free cash flow of more than $12 billion for 2026. The merger agreement with Netflix also provides WBD with more flexibility to operate in a normal course until closing. Given these factors, the Board determined that the Netflix merger remains superior to PSKY\u2019s amended offer.<\/p>\n

\n\tConsequences for WBD Shareholders Should PSKY Fail to Close the Transaction<\/p>\n

\n\tIf PSKY fails to close its offer, WBD shareholders would incur significant costs and potentially considerable value destruction. In addition to potentially enabling PSKY to abandon or amend its offer, the operating restrictions that PSKY would impose on WBD between signing and closing could impair WBD\u2019s financial condition and ability to maintain its competitive position in the markets in which it operates, and hinder its ability to retain key talent. This includes prohibiting WBD from pursuing the planned separation of Discovery Global and Warner Bros., which was designed to derisk our businesses by allowing each to focus on its own strategic plan. The PSKY offer would also prevent WBD from completing the contemplated debt exchange and refinancing our $15 billion bridge loan, which would limit our financial flexibility. If the PSKY offer fails to close, WBD shareholders would be left with shares in a business that has been restricted from pursuing its key initiatives for up to 18 months.<\/p>\n

\n\tFurther, WBD shareholders would receive insufficient compensation for the damage to our businesses should the PSKY offer not close. The $1.1 billion net amount of the regulatory termination fee that PSKY would pay to WBD for regulatory reasons represents an unacceptably low 1.4% of the transaction equity value and would not come close to helping WBD address the likely damage to our businesses.<\/p>\n

\n\tIn contrast, should Netflix fail to complete the merger for regulatory reasons, WBD would receive a $5.8 billion termination fee and WBD shareholders would still benefit from the initiatives that the Board and management team are implementing to secure the value of our businesses and ensure their long-term success, including the planned separation of Discovery Global and Warner Bros.<\/p>\n

\n\tThe PSKY Offer Is Not Superior, or Even Comparable, to the Netflix Merger<\/p>\n

\n\tPSKY has repeatedly failed to submit the best proposal for WBD shareholders despite clear direction from WBD on both the deficiencies and potential solutions. The WBD Board, management team and our advisors have extensively engaged with PSKY representatives and provided it with explicit instructions on how to improve each of its offers. Yet PSKY has continued to submit offers that still include many of the deficiencies we previously repeatedly identified to PSKY, none of which are present in the Netflix merger agreement, all while asserting that its offers do not represent its \u201cbest and final\u201d proposal.<\/p>\n

\n\tPSKY\u2019s transaction team, including many of their employees, several law firms, investment and lending banks and consultants, had several months to engage extensively with WBD. They are well aware of the reasons behind the Board\u2019s determination that the Netflix merger agreement is superior to its offer. If on December 4 PSKY did not recognize the weaknesses of its proposal when the Board concluded the process, it has now had several weeks to study the Netflix merger agreement and adjust its offer accordingly. Instead PSKY has, for whatever reason, chosen not to do so.<\/p>\n

\n\tYour Board negotiated a merger with Netflix that maximizes value while mitigating downside risks, and we unanimously believe the Netflix merger is in your best interest. We are focused on advancing the Netflix merger to deliver its compelling value to you.<\/p>\n

\n\tSincerely,
The Warner Bros. Discovery Board of Directors<\/p>\n","protected":false},"excerpt":{"rendered":"The song remains the same: Warner Bros. Discovery has turned down the latest acquisition offer by David Ellison\u2019s…\n","protected":false},"author":3,"featured_media":481899,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30],"tags":[171,77684,173,67,132,68,27281],"class_list":{"0":"post-499016","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-tv","8":"tag-entertainment","9":"tag-paramount-skydance","10":"tag-tv","11":"tag-united-states","12":"tag-unitedstates","13":"tag-us","14":"tag-warner-bros-discovery"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115854122931990076","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/499016","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=499016"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/499016\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/481899"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=499016"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=499016"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=499016"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}