- Warner Bros. Discovery’s board unanimously urged shareholders to reject Paramount Skydance’s hostile $30-per-share (~$108.4B) bid in favor of its binding Netflix deal.
- The board flags Paramount’s financing as shaky, citing limited Ellison-family backstop, reliance on an opaque revocable trust, and a highly leveraged structure with weak free cash flow.
- Though lower headline value, the Netflix transaction offers greater certainty via enforceable financing, an investment-grade buyer, and a large termination fee.
- Next steps hinge on whether Paramount sweetens terms and fixes financing while clearing regulatory, shareholder, and legal hurdles ahead of a 2026 vote.
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The current standoff between Warner Bros. Discovery (WBD) and Paramount Skydance (PSKY) pivots on value, risk, and certainty. Although Paramount’s latest offer of $30 per share (all cash; ~$108.4 billion enterprise value) exceeds Netflix’s $27.75 per share cash-and-stock offer (~$82.7 billion for studios and streaming) in nominal terms, WBD’s board argues strongly that Paramount’s bid fails under several critical criteria.
Chief among the board’s objections is the inadequacy of the financing guarantees. While Paramount claims a $40.65 billion equity commitment, WBD asserts that none of this is fully guaranteed by the Ellison family. Instead, funding depends on a revocable trust that caps liability in ways that leave considerable exposure to shareholders. Meanwhile, Netflix’s deal is already binding, backed by an investment-grade balance sheet, robust debt commitments, and no reliance on uncertain equity financing.
Regulatory risk and execution uncertainty further distinguish the two proposals. WBD’s board sees no meaningful difference in regulatory risk between the Netflix deal and PSKY’s, despite Paramount’s claims. However, the board is uneasy about Paramount’s heavy leverage (projected debt-to-EBITDA ~6.8×), its weak current free cash flow, and the possibility of amendment, delay, or termination of its offer via its conditions and the structure of its financing.
Strategically, WBD favors Netflix’s proposal because it aligns with a lower-risk path, greater certainty, and clarity on deal structure. While Netflix’s offer excludes certain non-core assets (e.g. CNN, Discovery’s networks), and involves a spin-off, it provides shareholders with cash, stock exposure to Netflix upside, and mitigated regulatory hurdles. Paramount’s bid, though broader, elevates leverage, financial risk, and governance uncertainty.
Key implications: if Paramount wants to win, it likely must improve equity commitments (fully guaranteed), perhaps raise the cash price, and reduce execution risk. Regulatory bodies are also watching closely; political dynamics (involving foreign backers, Trump’s statements) could influence outcomes. Shareholder vote isn’t expected until spring or early summer 2026.
Open questions include whether Paramount will revise its offer meaningfully, whether courts or regulators will intervene on financing disclosure or foreign investment, and whether WBD shareholders will still prefer Netflix’s deal even if Paramount sweetens the offer.
Supporting Notes
- Paramount’s hostile offer: $30 per share, all cash, ~$108.4 billion enterprise value.
- Netflix’s binding offer: $27.75 per share (cash + stock), covers only WBD’s studios and streaming business; values that business around $82.7 billion.
- Equity commitment claimed by PSKY: ~$40.65 billion, but board says no full Ellison family backstop and most is via a revocable trust with capped liability (~$2.8 billion) and opaque structure.
- Debt concerns: high leverage (~6.8× 2026E debt-to-EBITDA) and weak current free cash flow under PSKY bid; Netflix acquirer is large (~$400 billion market cap) and investment grade.
- Termination / break-up fees: Netflix deal carries a $5.8 billion termination fee; Paramount raised its own to match Netflix.
- Regulatory and shareholder risk: WBD board sees no material difference in regulatory risk between deals, despite divergent structures; shareholder vote expected in spring or early summer 2026.