The Warner Bros. Discovery board has again dismissed Paramount's hostile takeover attempt, branding it as "inadequate" and a "risk" to the company due to its reliance on an "extraordinary amount of incremental debt."
Paramount would have been forced to incur more than $50 billion in debt to buy the far larger Warner Bros., the latter's board said today in a fresh statement on the matter. This debt would pose "materially more risk for WBD and its shareholders" than accepting Netflix's offer for the company, which Warner Bros. has previously said it prefers.
Much of Paramount's proposed financing to buy Warner Bros. would have come from Larry Ellison, the billiaire owner of software company Oracle, whose son David Ellison is chairman and CEO of Paramount currently. But other funds would have come from elsewhere — including the wealth of royal families in Saudi Arabia, Qatar and Abu Dhabi.
Paramount's offer was for $30 per Warner Bros. share, a higher amount than the $27.75 per share that Netflix proposed. But Paramount's offer was also for the full company, while Netflix has said it would not buy Warner Bros.' cable business, which includes CNN and TNT Sports.
Warner Bros.' board previously told shareholders they should reject Paramount's hostile takeover bid in a statement last month. Today's fresh statement follows a subsequent response by Paramount that claimed Ellison would personally guarantee his stake and allow shareholders to examine the finances of his family trust. Paramount also increased the deal's breakup fee to match that of Netflix's offer. None of this, however, has changed the mind of the Warner Bros. board.
With this fresh rejection of Paramount's bid now public, Paramount itself still has the ability to go to Warner Bros. shareholders directly and force them to vote. Alternatively, it could raise its bid even higher, above $30 per share. Finally, it could drop the bid altogether and admit defeat.
Paramount launched its hostile takeover bid for Warner Bros. Discovery soon after Netflix emerged as the winner of a lengthy bidding war with an $82.7 billion deal. But even if Paramount does exit the process, Netflix’s proposal still faces a rough ride ahead from regulators. The offer has already sparked a tough response from some members of Congress, and it is expected to face significant scrutiny under antitrust laws.
At least one HBO Max subscriber has already sued Netflix, claiming the deal threatens to reduce competition in the U.S. subscription video-on-demand market. And then there's the hot topic of theatrical releases, which it's reported that Netflix is keen to shorten to just 17 days should its Warner Bros. buyout suceed. Netflix previously pledged it will continue to release Warner Bros. movies in theaters for now, though expects release windows to shorten over time to become "more user friendly."
Why is Netflix so interested in Warner Bros.? One report has claimed Netflix is particularly keen to obtain Warner Bros.' vast content library as the streamer ramps up its potential to offer AI-generation tools and content in the future.
Image credit: Myung J. Chun / Los Angeles Times via Getty Images
Tom Phillips is IGN's News Editor. You can reach Tom at tom_phillips@ign.com or find him on Bluesky @tomphillipseg.bsky.social
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