Board cites “significant risks” and “inferior” terms compared to Netflix’s $27.75-per-share offer, questioning Ellison family’s funding guarantees.

By yourNEWS Media Newsroom

Warner Bros. Discovery’s board unanimously rejected Paramount Skydance’s $108.4 billion hostile bid on Wednesday, calling the $30-per-share cash offer “inferior” to Netflix’s $27.75-per-share deal and accusing Paramount of “consistently misleading” shareholders about its financing guarantees.

In a regulatory filing, the board stated that Paramount’s claim of a “fully backstopped” offer by the Ellison family—led by Oracle CEO Larry Ellison—was “false”:

“It does not, and never has. The offer poses numerous, significant risks.”

Netflix’s Deal Deemed More Reliable

The board emphasized that Netflix’s binding agreement—which includes Warner Bros.’ film/TV studios, HBO Max, and CNN—requires no equity financing and has “robust debt commitments”, making it a safer, more certain transaction.

Paramount’s latest bid, the board argued, relies on an equity commitment from the “Lawrence J. Ellison Revocable Trust“—a non-transparent entity with no guaranteed funds and assets that “could be withdrawn at any time.”

“A revocable trust is no replacement for a secured commitment by a controlling shareholder,” the board wrote.

Paramount’s Financial Risks Highlighted

Warner Bros. raised concerns about:

  • Paramount’s $15 billion market cap (vs. Netflix’s $400B+).
  • Its near-junk credit rating and 6.8x debt-to-income ratio post-deal.
  • “Onerous operating restrictions” during the transition period.
  • $9B in “ambitious” synergies that could lead to job cuts and industry weakening.

The board also dismissed Paramount’s “air-tight financing” claims, noting that only 32% of the equity commitment is tied to the Ellison trust, with liability capped at $2.8 billion.

Regulatory and Breakup Fee Advantages

While Paramount applied for U.S. regulatory approval, Warner Bros. stated that both deals would likely clear antitrust hurdles. However, Netflix’s $5.8B breakup fee (vs. Paramount’s $5B) and binding structure made it the clearer choice.

“The PSKY offer provides an untenable degree of risk,” the board concluded, urging shareholders to support the Netflix merger.

Paramount has not yet responded to the rejection. Warner Bros. shares dipped 0.5% in premarket trading, while Netflix rose 1.7%. The battle for Warner Bros. now hinges on whether Paramount can address the board’s concerns or if shareholders will side with Netflix’s offer.

Original article
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