Warner Bros. Discovery Rejects Paramount's $108 Billion Hostile Bid, Doubles Down on Netflix Deal

Warner Bros. Discovery delivered a decisive rebuke to Paramount Skydance on Wednesday, unanimously rejecting the entertainment conglomerate's amended $108.4 billion hostile takeover offer and reaffirming its commitment to the transformative merger with Netflix. The rejection sets the stage for a dramatic final act in one of media's most contentious corporate battles.

The WBD board characterized Paramount's latest proposal as "inferior" across multiple dimensions, citing the extraordinary debt financing required to complete the transaction and the execution risks inherent in what would be the largest leveraged buyout in history. With Paramount's tender offer scheduled to expire Thursday, the decision appears to close the door on David Ellison's months-long pursuit of the entertainment giant.

Why WBD Says No to $30 Per Share

On paper, Paramount's $30 per share all-cash offer exceeds Netflix's $27.75 per share cash-and-stock proposal. But Warner Bros. Discovery's board concluded that the premium doesn't compensate for the substantial risks embedded in Paramount's financing structure.

"The Board unanimously determined that Paramount's latest offer remains inferior to our merger agreement with Netflix across multiple key areas. The extraordinary amount of debt financing as well as other terms heighten the risk of failure to close."

— Samuel Di Piazza, Warner Bros. Discovery Chairman

The math tells a striking story. Paramount Skydance, with a market capitalization of roughly $14 billion, is attempting to acquire a company requiring $94.65 billion in debt and equity financing—nearly seven times its own total market value. To complete the transaction, Paramount would need to incur more than $50 billion in incremental debt.

Key concerns cited by the WBD board:

• Financing complexity: The transaction would require the largest LBO debt package ever assembled
• Execution risk: Larry Ellison's $40.4 billion personal guarantee, while substantial, doesn't eliminate deal uncertainty
• Regulatory hurdles: An all-cash transaction could face different antitrust scrutiny than Netflix's stock-based offer
• Integration challenges: Paramount's plan to acquire the entire company—including Discovery's networks—raises strategic questions

The Netflix Advantage

In contrast to Paramount's complex financing arrangement, Netflix brings extraordinary financial stability to its proposed acquisition. The streaming giant commands a market capitalization of approximately $400 billion, an investment-grade balance sheet with A/A3 credit ratings, and projected free cash flow exceeding $12 billion for 2026.

Netflix's deal, announced December 5, would acquire Warner Bros.—including the legendary film studio, HBO, and streaming platform Max—while allowing Discovery Global's TV-centric assets (CNN, Discovery Channel, HGTV) to be spun off into a separate publicly traded company. WBD shareholders would retain shares in Discovery Global, providing continued exposure to the traditional media business.

The strategic logic appeals to WBD's board. Netflix gains a content powerhouse with premier intellectual property spanning DC Comics, Harry Potter, Game of Thrones, and decades of Warner Bros. film library. Warner Bros. gains access to Netflix's 290 million global subscribers and its sophisticated recommendation algorithms and production infrastructure.

What Paramount Wanted

Paramount's competing vision centered on creating a traditional media colossus by combining Paramount's broadcast and cable networks with WBD's entire portfolio. David Ellison, whose Skydance Media produces major franchises including Top Gun and Mission: Impossible, believed the combination could achieve significant cost synergies while competing more effectively against streaming giants.

Larry Ellison's involvement added credibility to the financing. The Oracle co-founder's personal guarantee of $40.4 billion represented an unprecedented individual commitment to a corporate acquisition, demonstrating the Ellison family's conviction in the deal's strategic merit.

But WBD's board remained skeptical. The all-cash nature of Paramount's offer would require WBD shareholders to exit their investment entirely, forfeiting any upside from the combined company's future performance. Additionally, the massive debt load could constrain the combined entity's ability to invest in content and technology at a time when the streaming wars demand aggressive capital deployment.

The Tender Offer Deadline

Paramount's tender offer is scheduled to expire on Thursday, January 8, unless extended. As of Wednesday evening, the company had not indicated whether it would pursue further amendments or allow the offer to lapse.

Under the terms of the tender offer, Paramount would need a majority of WBD shares tendered to proceed. Given the board's unanimous opposition and recommendation that shareholders reject the offer, achieving that threshold appears highly unlikely without significantly sweetening the terms.

Market observers suggest Paramount has limited options:

• Raise the price: A higher offer could test shareholders' patience with the board's rejection
• Extend the offer: Keeping the tender open could create uncertainty around the Netflix deal
• Walk away: Acknowledge defeat and refocus on Paramount's standalone strategy
• Litigation: Challenge the Netflix deal's terms or board's fiduciary duties (unlikely to succeed)

Market Reaction

Warner Bros. Discovery shares traded flat on Wednesday as the market had largely anticipated the board's rejection. The stock continues to trade at a modest discount to Netflix's offer price, reflecting both the time value of money until closing and residual uncertainty about regulatory approval.

Paramount Skydance shares slipped 0.4% as investors recalibrated expectations for the company's strategic direction. Without WBD's content assets, Paramount will need to articulate a compelling standalone vision for competing in an industry increasingly dominated by global streaming platforms.

Netflix shares rose 1.1%, continuing their strong start to 2026 as investors express confidence in the company's content strategy. The WBD acquisition, if completed, would be the largest in Netflix's history and would fundamentally transform its competitive position.

What Comes Next

With Paramount's offer likely to expire, attention turns to the regulatory path for Netflix's acquisition. The Department of Justice and Federal Trade Commission will evaluate the transaction's competitive implications, particularly in streaming markets where Netflix's combination with HBO Max would create a formidable offering.

European regulators will also scrutinize the deal, given both companies' significant international operations. The European Commission has historically taken an aggressive stance on media consolidation, though Netflix's smaller market share in many European countries could ease concerns.

The planned spin-off of Discovery Global adds complexity to the regulatory timeline. Shareholders will need to approve both the Netflix merger and the separation, requiring extensive disclosure and potentially multiple shareholder votes.

Assuming regulatory clearance, Netflix expects to close the transaction in the third quarter of 2026—a timeline that would allow WBD's current management to complete the Discovery Global separation while Netflix prepares for integration. For shareholders who have endured years of volatility in media stocks, the clarity of a definitive transaction provides welcome resolution to an uncertain era.