Warner Bros Discovery has formally recommended its shareholders reject a revised acquisition proposal from Paramount Skydance, dismissing the offer as financially inferior and laden with excessive risk. This marks the second rejection within a month, following the board’s December 5th announcement of a $72 billion agreement with Netflix for the company’s film and streaming divisions.
The board’s unanimous decision, communicated through an official shareholder letter, emphasized that Paramount’s amended proposal fails to qualify as a ‘superior offer’ under merger agreement criteria. Chairman Samuel Di Piazza Jr. characterized the bid as containing ‘an extraordinary amount of debt financing that create risks to close and lack of protections for our shareholders.’
Paramount’s latest proposition, valued at over $108 billion, seeks to acquire Warner Bros Discovery in its entirety—including cable networks CNN and TNT, European free-to-air channels, and Discovery properties. This contrasts sharply with Netflix’s targeted acquisition of only the film and streaming segments, following Warner’s planned operational separation later this year.
The board highlighted several critical concerns regarding Paramount’s offer, including a required $2.8 billion termination fee payable to Netflix if the existing merger agreement is abandoned. Additionally, analysts note the peculiar financial dynamics of Paramount—with a market valuation of approximately $14 billion—attempting to orchestrate a acquisition requiring over $94 billion in combined debt and equity financing.
Warner’s leadership maintains that the Netflix agreement provides ‘superior value at greater levels of certainty’ while avoiding the significant risks associated with Paramount’s highly leveraged proposal. The board’s assessment concludes that Paramount has ‘repeatedly failed to submit the best proposal’ despite being provided clear guidance on addressing deficiencies.
Netflix co-CEO Ted Sarandos previously affirmed that their transaction serves the ‘best interest of stockholders,’ creating a streamlined content powerhouse while avoiding the financial complexities of Paramount’s approach. Paramount Skydance has not yet issued public commentary regarding the latest rejection.