Warner Bros. Discovery rejects Paramount Skydance bid for the eighth time

Warner Bros. Discovery's board again recommended shareholders reject Paramount Skydance's hostile offer, saying the amended proposal provides insufficient value and carries financing uncertainty, and reiterated that a negotiated deal with Netflix remains its preferred outcome.

Warner Bros. Discovery's board has for an eighth time rejected a hostile acquisition proposal from Paramount Skydance. The board posted a letter saying the amended offer still fell short on value and that the financing arrangements raised doubts about the deal's certainty. Paramount revised a roughly $108 billion proposal and said $40.4 billion of equity would be backstopped by Larry Ellison rather than a trust the board had described as opaque. WBD reiterated that it negotiated a merger with Netflix that the board believes better balances value and downside risk. Board's key reasons: - The board said the Paramount offer would leave shareholders with "insufficient value" after added costs, including a $2.8 billion termination fee to Netflix, a $1.5 billion fee tied to a failed debt exchange and about $350 million of incremental interest, which the letter estimated at roughly $4.7 billion in total (about $1.79 per share). - The board expressed concern about the certainty of closing because of the extraordinary amount of debt financing Paramount would need; the letter described the proposal as a leveraged buyout with about $87 billion of pro forma gross debt and estimated leverage near 7x 2026E EBITDA, while noting PSKY's market capitalization is much smaller. - Paramount amended its bid to state that Larry Ellison would backstop $40.4 billion of equity rather than relying on a family trust the board had previously labeled "unknown and opaque." - WBD said the negotiated deal with Netflix provides cash plus a target value for Netflix stock and includes a $5.8 billion termination fee if Netflix cannot complete the merger; the Netflix agreement covers studio and streaming assets while legacy networks would remain in a separate entity. - Paramount continues to assert an all-cash $30 per share offer for the entire company; the company can attempt to persuade shareholders, raise its bid, pursue litigation, or withdraw its proposal. Summary: The WBD board concluded Paramount's amended proposal remains inferior to the negotiated Netflix merger because of additional costs and the perceived risk that the financing may not close. Paramount has several potential paths forward, including seeking shareholder support, revising its financing or bid, or pursuing legal action; how the situation will resolve is undetermined at this time.