- Warner Bros. Discovery rejected Paramount/Skydance’s updated $108.4B hostile bid, calling it a debt-heavy, high-risk offer with insufficient value.
- Paramount added a $40.4B Larry Ellison equity guarantee and matched Netflix’s $5.8B reverse breakup fee, but WBD says financing and operating constraints still weaken certainty.
- WBD continues to favor Netflix’s roughly $82.7B deal to buy its studios and streaming assets, citing a clearer path to closing and lower regulatory and execution risk.
- Shareholders can tender into Paramount’s offer until Jan. 21, 2026, with both transactions expected to face intense antitrust scrutiny.
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The current situation with Warner Bros. Discovery illustrates a high-stakes corporate and regulatory showdown between two major media deals—Paramount’s full-company hostile bid and Netflix’s more narrowly scoped acquisition—under the lens of financial risk, deal certainty, and strategic positioning.
Key Financial Comparisons and Risk Assessment
Paramount’s bid, at $108.4 billion enterprise value (~$30/share all-cash), is higher headline-wise than Netflix’s $82.7 billion proposal but carries significant caveats: $87 billion in debt, potential restrictions that limit operational flex, and liabilities in case of deal failure. Warner’s board believes that despite a sizeable equity guarantee from Larry Ellison ($40.4 billion), Paramount’s reliance on large debt financing makes its offer structurally risky.
Deal Structure Differences
Netflix’s offer only acquires WBD’s studio and streaming assets (including HBO and HBO Max), excluding cable networks such as CNN and Discovery. Paramount wants to acquire the whole company, which increases regulatory risk and the complexity of closing. WBD plans to spin off its news and cable operations if Netflix deal proceeds.
Regulatory and Timeline Considerations
Either deal is likely to face intense antitrust scrutiny. The board values Netflix’s offer for clearer path to closing, fewer regulatory roadblocks, and less execution risk. Paramount’s offer, while amended to include a matching reverse termination fee of $5.8 billion, is still seen as burdened by potential closing uncertainties.
Strategic Implications
Welcoming the Netflix deal consolidates Warner’s streaming and studio assets under a buyer with investment-grade credit, arguably stabilizing those operations. Paramount’s full acquisition could transform the competitive landscape by integrating cable networks, but it also exposes the combined entity to concentrated regulatory, debt, and operational risk. For shareholders, the decision hinges on balancing above-market short-term value vs. assured deal closings and less post-merger disruption.
Open Questions
- Will Paramount further increase its offer price per share, or reduce reliance on debt financing to shift WBD’s board’s assessment?
- Which parts of the regulatory and political risk spectrum (U.S. DOJ, FCC, foreign jurisdictions) are likelier to derail either deal?
- How will the upcoming tender offer deadline (Jan 21, 2026) impact shareholder sentiment and potential legal challenges?
Supporting Notes
- WBD’s board unanimously rejected Paramount’s updated $108.4 billion bid, calling it a risky leveraged buyout overly dependent on debt.
- Paramount offered a $40.4 billion personal guarantee from Larry Ellison and raised its reverse termination fee to $5.8 billion—matching Netflix’s.
- Netflix’s proposal of ~$82.7 billion is viewed by WBD as a more certain transaction, despite being structurally narrower—only buying studios and streaming content.
- WBD described Paramount’s offer as providing “insufficient value,” with terms that could impose operational restrictions and risk if the deal fails.
- Shareholders have a deadline of January 21, 2026, to tender their shares in response to Paramount’s hostile offer.
- Analysts and WBD leadership believe Paramount’s offer faces heightened regulatory and execution risk compared with Netflix’s more modest, clearer deal.