Warner Bros. Discovery Board Urges Shareholders to Reject Paramount Skydance Bid, Back Netflix Merger

Warner Bros. Discovery’s board on Jan. 7 urged shareholders to reject an improved hostile takeover offer from Paramount Skydance and instead back a lower‑valued merger with Netflix, escalating a high‑stakes contest over who will control one of Hollywood’s most prized libraries.

In a unanimous decision, the board said Paramount’s amended $30‑a‑share, all‑cash tender offer is not in the best interests of investors and does not qualify as a “superior proposal” under Warner Bros. Discovery’s existing merger agreement with Netflix. Directors reaffirmed their recommendation in favor of the Netflix transaction and called on shareholders not to tender their stock into Paramount’s bid.

“The amended Paramount Skydance offer is not in the best interests of WBD and its shareholders and does not meet the criteria of a ‘Superior Proposal’ under the terms of WBD’s merger agreement with Netflix,” the company said in a statement.

Two-week showdown as offer nears expiration

The decision pits the streaming era’s dominant platform against a newly muscled traditional media group, and sets up a two‑week showdown before Paramount’s offer is due to expire on Jan. 21.

At issue is whether investors should accept a higher headline price from Paramount—financed with what Warner Bros. Discovery described as the largest leveraged buyout in history—or stick with Netflix’s lower but less debt‑heavy cash‑and‑stock deal.

What the Netflix deal includes

Netflix and Warner Bros. Discovery announced their agreement on Dec. 5, 2025. Under that transaction, Netflix would acquire Warner Bros.’ film and television studio operations and HBO, including the Max streaming service, after Warner Bros. Discovery completes a planned spinoff of its cable and news networks into a separate company called Discovery Global.

The Netflix deal values Warner Bros. Discovery at about $72 billion in equity, or $27.75 per share. Shareholders would receive $23.25 in cash and $4.50 in Netflix stock for each share, subject to a collar that caps the number of Netflix shares issued if its stock price moves sharply before closing. The total enterprise value of the transaction, including debt, is estimated at $82.7 billion.

Paramount’s hostile offer—and what changed

Paramount Skydance—the combined entity formed from Paramount Global and Skydance Media—responded three days later with a surprise hostile bid. On Dec. 8, it launched an unsolicited tender offer to buy all of Warner Bros. Discovery, including Discovery Global, for $30 a share in cash. The offer implied an enterprise value of about $108 billion and would create a vertically integrated group spanning broadcast network CBS, cable channels, movie studios and streaming platforms Paramount+ and Max.

Warner Bros. Discovery’s board rejected the initial offer on Dec. 17. On Dec. 22, Paramount revised its bid without raising the $30 price. Instead, it added financial protections aimed at easing concerns over funding and execution risk.

In the amended offer, Paramount increased the reverse termination fee—money it would owe Warner Bros. Discovery if the deal failed to close under certain circumstances—to $5.8 billion. It also announced a $40.4 billion personal guarantee from Oracle co‑founder Larry Ellison, who controls Paramount Skydance, to backstop a large portion of the equity financing.

Paramount has described the revised proposal as “a superior $30‑per‑share all‑cash offer” that delivers greater value and certainty than the Netflix agreement. It has emphasized that its bid is fully financed and not subject to a financing condition, and has argued that an all‑cash deal avoids exposing Warner Bros. Discovery shareholders to movements in Netflix’s stock price.

Why WBD’s board says it still isn’t superior

Warner Bros. Discovery’s directors disagreed. In a detailed letter sent to shareholders alongside the Jan. 7 statement, the board said that after taking into account the costs of terminating the Netflix deal and the risks around Paramount’s financing and regulatory approvals, the rival proposal did not offer better, risk‑adjusted value.

If Warner Bros. Discovery were to walk away from Netflix, it would owe the streaming company a termination fee of about $2.8 billion. The board said related taxes, legal expenses and other costs would raise the total “switching cost” to roughly $4.7 billion, or about $1.79 per share.

“Once the costs and risks of terminating the Netflix transaction are taken into account, the incremental value of the amended Paramount Skydance offer is substantially reduced,” the board told shareholders.

Directors also highlighted the amount of debt required to complete Paramount’s bid. Warner Bros. Discovery estimated that the combined company would carry about $87 billion in gross debt, equivalent to roughly seven times projected 2026 earnings before interest, taxes, depreciation and amortization.

“This would result in what we believe would be the largest leveraged buyout in history,” the board wrote.

Warner Bros. Discovery criticized what it called “highly restrictive” operating covenants in Paramount’s proposed merger agreement. The company said those provisions would limit its ability to renegotiate key distribution and affiliation contracts, carry out the planned Discovery Global spinoff or refinance a $15 billion bridge loan without Paramount’s approval during a regulatory review that could last 12 to 18 months.

In the board’s view, those restrictions could damage Warner Bros. Discovery’s competitive position if the deal ultimately failed, even if it received the reverse break fee.

Reactions from Netflix and Paramount

Netflix welcomed the Jan. 7 decision. Co‑Chief Executive Ted Sarandos said in a statement that the company “fully supports the Warner Bros. Discovery board’s commitment to our merger agreement,” describing the combination as “a compelling opportunity to bring even more of the world’s best storytelling to audiences everywhere.”

Paramount Skydance has continued to press its case. In prior statements, Chief Executive David Ellison has said the company remains “fully committed” to its $30‑per‑share offer and has urged Warner Bros. Discovery’s board to engage in negotiations. The company has argued that its proposal offers a faster, more certain cash payout and that its reverse termination fee, coupled with Larry Ellison’s guarantee, provides strong protection if regulators block the deal.

Antitrust scrutiny looms

The rival bids are being weighed amid heightened scrutiny of media consolidation in Washington and Brussels. Netflix and Warner Bros. Discovery have already filed notification under the Hart‑Scott‑Rodino Antitrust Improvements Act in the United States and are in discussions with the Department of Justice and the European Commission. Regulators are expected to examine whether combining Netflix’s distribution platform with Warner Bros.’ and HBO’s deep content library could disadvantage competing streamers’ access to popular shows and films.

A Paramount–Warner Bros. Discovery merger would raise a different set of concerns. Antitrust officials would likely focus on the concentration of news and sports assets under one roof—including CNN and CBS News, along with major sports rights—and the effect on traditional pay‑TV and advertising markets. The prospective involvement of foreign sovereign wealth funds in financing Paramount’s offer has also prompted questions from some lawmakers and advocacy groups about overseas influence in U.S. media, particularly in news.

Markets weigh the odds

Investors so far have treated both outcomes as uncertain. Warner Bros. Discovery shares were trading around the high‑$28 range after the Jan. 7 announcement, below Paramount’s $30 offer but slightly above the implied value of the Netflix consideration at then‑current prices. The gap suggests markets see some chance of an improved bid from Paramount or a sweetened offer from Netflix, but are discounting the risk that either transaction could fail or face lengthy delays.

Some hedge funds and activist shareholders have publicly urged Warner Bros. Discovery to extract more value, arguing that the board should use Paramount’s interest to secure a higher price from Netflix or force Paramount to raise its cash offer. Others have backed the directors’ focus on deal certainty in an industry that has already undergone painful rounds of cost‑cutting and restructuring.

What’s at stake for Hollywood

Whichever bidder prevails, the outcome will reshape the global entertainment landscape. A Netflix‑Warner Bros. combination would unite the world’s largest subscription streaming platform with franchises such as Harry Potter, Game of Thrones and DC Comics under one corporate roof. A Paramount–Warner Bros. Discovery merger would create a sprawling media conglomerate spanning broadcast television, cable news, film studios and multiple streaming platforms.

For now, Warner Bros. Discovery’s leadership is standing by its agreement with Netflix. Shareholders must decide over the coming days whether to follow that recommendation or tender into Paramount’s offer, knowing that regulators, debt markets and a rapidly changing media business will ultimately determine which vision for Hollywood’s future prevails.