Warner Bros Discovery spurns Paramount bid, backs Netflix merger

Wednesday 17 December 2025 - 16:50

By: Dakir Madiha

Warner Bros Discovery spurns Paramount bid, backs Netflix merger

Warner Bros. Discovery has decisively turned down Paramount Skydance's $108.4 billion hostile takeover attempt, marking the seventh rejection in 12 weeks. The board, led by Samuel A. Di Piazza Jr., deemed the $30-per-share all-cash proposal inadequate and laden with substantial risks, particularly in its financing setup. Instead, it urged shareholders to support the earlier Netflix agreement, which promises greater certainty and value in a rapidly consolidating media landscape.

Financing flaws undermine Paramount offer

Central to the rejection are deep reservations about Paramount's funding structure, which hinges on an opaque revocable trust connected to Oracle co-founder Larry Ellison. Warner Bros. Discovery highlighted the lack of any binding commitment from the Ellison family for the $40.65 billion equity portion. A liability cap of just $2.8 billion equivalent to 7% of the pledge further erodes confidence, even for deliberate breaches, with potential damages far exceeding that figure.

Compounding these issues, Jared Kushner's Affinity Partners pulled out of the bid the day before the announcement, citing the presence of formidable rivals. This exit underscores the mounting challenges for Paramount, whose offer remains open to improvement but faces skepticism amid Hollywood's high-stakes maneuvering. Investors and analysts watching the streaming wars see this as a symptom of broader tensions between legacy studios and tech-driven platforms.

Netflix deal offers stability and scale

The preferred path forward is the December 5 Netflix pact, valuing Warner's studios, HBO, and streaming assets at $27.75 per share $23.25 cash plus $4.50 in Netflix stock for a $72 billion equity total and $82.7 billion enterprise value. Cable networks like CNN would spin off into Discovery Global, allowing Netflix to dominate premium content production. With Netflix's market cap over $400 billion, the deal projects $2-3 billion in annual synergies within three years.

Netflix co-CEO Ted Sarandos praised the board's stance, positioning the merger as superior for shareholders. Shareholder approval is slated for spring or early summer 2026, pending regulatory nods from U.S. antitrust bodies and European authorities. This alignment reflects industry shifts toward bundling vast libraries to combat subscriber churn and fuel AI-enhanced content strategies.

Regulatory hurdles and industry ripple effects

Both bids navigate intense scrutiny: U.S. regulators may probe competition in news and streaming, while Europe emphasizes cultural diversity. Paramount's all-in approach contrasts Netflix's targeted acquisition, but neither is immune to delays. Warner CEO David Zaslav's talks with the Ellisons yielded no breakthroughs, amid pushback from Hollywood creatives wary of Netflix's growing sway.

Strategic outlook in media consolidation

This episode signals accelerating realignments, with Netflix poised to absorb icons like DC Comics and HBO hits, bolstering global reach including emerging markets hungry for localized blockbusters. Warner's stock has surged 121% since September rumors, drawing interest from international funds. As mergers reshape Hollywood, the focus sharpens on sustainable growth amid ad slumps and data-driven personalization.