Warner Bros Discovery (WBD) has once again turned down Paramount Skydance’s latest attempt to acquire the studio, citing an “inadequate” offer and the high risks associated with the proposed leveraged buyout. The decision keeps WBD on track to pursue its previously announced deal with streaming giant Netflix, a move welcomed by investors and industry observers.

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Paramount’s $108 Billion Bid Deemed Risky

In a letter to shareholders on Wednesday, the WBD board described Paramount’s revised $108.4 billion hostile bid as overly reliant on debt financing, warning that the structure could jeopardize the deal’s completion. Paramount’s plan includes $40 billion in equity—personally guaranteed by Oracle co-founder Larry Ellison—and $54 billion in debt, which would constitute the largest leveraged buyout in history.

“The revised offer remains inadequate, particularly given the insufficient value it would provide, the lack of certainty in Paramount Skydance’s ability to complete the offer, and the risks and costs borne by WBD shareholders should Paramount fail to close the deal,” the board said.

By contrast, Netflix’s $82.7 billion offer includes cash and stock, with a stronger investment-grade credit rating, providing a more stable financing structure and lower execution risk.

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Shareholder Pushback and Industry Opinions

Some investors have pushed back against WBD’s decision. Matthew Halbower, CEO of Pentwater Capital Management, called Paramount’s bid “economically superior” and criticized the board for rejecting the offer.

Despite this, analysts emphasize that Netflix’s deal offers clearer certainty and less financial risk, especially given Paramount’s weaker credit rating, already classified as junk by S&P Global. Paramount’s bid also includes potential costs if the deal fails, including operational constraints that could harm the studio’s competitive position.

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Netflix Welcomes WBD Decision

Netflix co-CEOs Ted Sarandos and Greg Peters praised WBD’s rejection of Paramount’s offer, calling it “the superior proposal” that maximizes value for shareholders, creators, and consumers. WBD Chairman Samuel Di Piazza noted that while the company remains open to negotiations with Paramount, any future bid would need to be significantly more compelling.

The WBD board reviewed Paramount’s December 22 revised offer, which included Ellison’s personal guarantee and a higher reverse termination fee of $5.8 billion. Despite improvements, WBD concluded the Paramount bid still carried significant risks compared with the Netflix transaction, including a potential $4.7 billion in additional costs if WBD abandoned its Netflix merger agreement.

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The Battle for Hollywood’s Crown Jewels

The stakes are high: Warner Bros Discovery owns prized franchises such as Harry Potter, Game of Thrones, Friends, and the DC Comics universe, along with classic films including Casablanca and Citizen Kane. Paramount’s bid would merge two major Hollywood studios, creating a formidable competitor to Disney and combining streaming platforms and cable TV networks.

WBD is also planning a spin-off of its cable networks, including CNN, TNT Sports, and Discovery+, whose valuation remains a major point of contention. Paramount values these assets at roughly $1 per share, while analysts estimate up to $4 per share.

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Market Reactions

Following the rejection, Warner Bros Discovery shares rose 0.3%, while Netflix also gained 0.3%. Paramount’s stock declined 0.1%. Analysts expect the takeover battle to continue, with Paramount likely to submit further bids to win shareholder support.

“WBD does not want to sell to Paramount, so it will keep rejecting Paramount as long as it is able,” said Ross Benes, analyst at eMarketer.

Lawmakers from both parties have raised concerns about media consolidation, and President Donald Trump has indicated he may weigh in on the high-profile acquisition.

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Key Takeaways

• Warner Bros Discovery rejects Paramount Skydance’s $108.4B hostile bid.
• Paramount’s deal deemed risky due to $54B debt financing and potential execution failures.
• Netflix’s $82.7B offer viewed as more stable, with fewer financial and regulatory risks.
• WBD remains focused on its Netflix merger, while Paramount may submit revised offers.
• The battle involves major franchises, streaming platforms, and a planned cable network spin-off.