Warner Bros Discovery‘s board unanimously rejected Paramount Skydance‘s revised $108.4 billion hostile takeover offer on Wednesday, reaffirming its commitment to Netflix’s $82.7 billion agreement despite Paramount’s higher per-share price.
The board called Paramount’s $30 per share all-cash proposal a risky leveraged buyout that would create approximately $87 billion in total debt, making it effectively the largest LBO in history.
Board Chairman Samuel Di Piazza said the proposal fell short of Netflix’s deal in value, financing certainty, and shareholder protections if the transaction failed.
Read: Warner Bros Discovery To Reject Paramount’s Hostile Takeover, Keeps Netflix Agreement
Paramount amended its December offer with Oracle billionaire Larry Ellison’s irrevocable $40.4 billion personal guarantee and increased the termination fee to $5.8 billion, matching Netflix’s breakup payment. However, Warner’s board argued these changes failed to address fundamental structural problems.
The board noted Paramount has a $14 billion market capitalization but requires $94.65 billion in combined debt and equity financing. This creates material execution risk, particularly given Paramount’s reliance on multiple lenders to provide $54 billion in committed debt at closing.
Warner contrasted this with Netflix’s $400 billion market cap, investment-grade credit rating, and estimated $12 billion in free cash flow for 2026.
Switching Deals Would Cost $4.7 Billion
The board calculated that abandoning Netflix to accept Paramount’s offer would trigger immediate costs of $4.7 billion, including a $2.8 billion Netflix termination fee, $1.5 billion debt exchange penalty and $350 million in additional interest.
After accounting for these switching costs, Paramount’s $5.8 billion reverse termination fee would net only $1.1 billion in shareholder protection if the deal subsequently failed. The board stated this would not adequately compensate for potential business damage during 18 months of operating restrictions.
Shareholder Division and Next Steps
Pentwater Capital Management, Warner’s seventh-largest shareholder, publicly criticized the decision. CEO Matthew Halbower told CNBC the board made an error by refusing to engage with Paramount’s revised proposal, arguing the $30 cash offer provides economic and regulatory advantages.
Netflix issued a statement supporting Warner’s decision and confirming continued engagement with the Justice Department and European Commission on antitrust review.
Paramount has not responded to the latest rejection. The company can walk away, increase its bid, or take its case directly to Warner shareholders through a proxy fight. Some analysts speculate that Paramount may pursue litigation over the bidding process.
Under the Netflix agreement, Warner will sell its studio and streaming assets, including Warner Bros Pictures, HBO, and Max, while spinning off cable networks CNN, TNT, and Discovery Channel into a separate company called Discovery Global in mid-2026.
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