By Business News Correspondent
Maureen Iluobe
Warner Bros. Discovery has firmly shut the door on Paramount’s renewed attempt to acquire the media giant, opting instead to stand by its agreed transaction with Netflix and cautioning investors against what it described as a high-risk alternative.
In a message issued to shareholders on Wednesday, January 7, the WBD board said Paramount’s latest proposal failed to overcome fundamental concerns that had already led to its rejection. Despite claims by Paramount that it had restructured the bid to address earlier objections, the board maintained that the offer still lacks financial stability and certainty.
Directors warned that Paramount’s plan is heavily debt-dependent and closely resembles a leveraged buyout. To complete the acquisition, Paramount—whose market size trails that of Warner Bros. Discovery—would reportedly need to secure more than $50 billion in new borrowing through complex financing structures.
According to the board, such a framework would expose WBD and its shareholders to significant financial risk, a sharp contrast to what it described as the clear and dependable terms of the Netflix transaction.
Paramount has pointed to financial backing from Oracle founder Larry Ellison as evidence of the bid’s credibility. Ellison is supporting the deal championed by his son, Paramount CEO David Ellison, who ignited the takeover contest last year with an unsolicited move targeting key Warner Bros. Discovery assets, including CNN.
That approach prompted WBD, under CEO David Zaslav, to initiate a competitive sale process, which ultimately resulted in Netflix’s winning offer. The Netflix agreement values WBD at $27.75 per share, consisting of $23.25 in cash and the remainder in Netflix stock.
After being rebuffed, Paramount countered with a higher public bid of $30 per share. However, Warner Bros. Discovery has repeatedly dismissed the proposal, citing not only its reliance on heavy borrowing but also restrictive conditions attached to the deal.
The board also highlighted stark differences in how the two suitors value WBD’s cable television business. These assets—including CNN—are excluded from the Netflix agreement and are scheduled to be spun off later this year into a standalone public company, Discovery Global. While WBD believes the new entity could generate meaningful shareholder value, Paramount is said to have priced it at just $1 per share.
Earlier, Warner Bros. Discovery had labeled Paramount’s initial bid “illusory,” raising red flags over its financing sources, which were expected to include investors from the Middle East.
In an effort to bolster confidence, Paramount announced on December 22 that Larry Ellison would personally guarantee $40.4 billion of the $78 billion required for the deal. The company also increased its breakup fee to $5.8 billion, matching Netflix’s penalty clause, though it left its per-share offer unchanged.
With the board’s latest decision, Paramount is now at a crossroads. It can abandon the pursuit, sweeten its offer, or escalate the battle by appealing directly to shareholders. As the bid remains hostile, Paramount could still seek a shareholder vote that, if successful, would override the board’s recommendation.
