In a decisive move amid one of the entertainment industry's most intense bidding wars, the board of Warner Bros. Discovery (WBD) on January 7, 2026, unanimously rejected the latest amended hostile takeover offer from Paramount Skydance, describing it as "inadequate," "inferior," and structurally akin to a high-risk leveraged buyout. The board urged shareholders to stick with the previously agreed merger with Netflix, emphasizing the "certainty" and lower risk of that transaction.
In a detailed letter to shareholders, the WBD board highlighted significant concerns over Paramount Skydance's financing structure, which relies on an "extraordinary amount of debt financing" to fund the proposed $108.4 billion deal. Despite revisions aimed at addressing prior objections—including a personal financial backstop from Oracle co-founder Larry Ellison—the board maintained that the bid poses "materially more risk" to WBD and its investors compared to the Netflix agreement. The letter noted potential uncertainties in closing the deal, higher costs, and the possibility of substantial value destruction if the Paramount transaction were to fail.
The saga began in late 2025 when David Ellison, CEO of Skydance Media and son of Larry Ellison, launched an unsolicited approach targeting WBD's assets, including Warner Bros. studios, HBO, and CNN. This prompted WBD CEO David Zaslav to initiate a formal auction process. After evaluating multiple suitors, WBD announced on December 4, 2025, a merger agreement with Netflix valued at approximately $82.7 billion in enterprise value ($72 billion equity value). Under the terms, Netflix would acquire Warner Bros., HBO, and related streaming assets for $27.75 per WBD share—comprising $23.25 in cash and the remainder in Netflix stock (subject to a collar mechanism). Notably, the deal excludes WBD's cable television networks, which are slated for a spin-off into a separate publicly traded entity called Discovery Global later in 2026. WBD shareholders would retain ownership in this spun-off company, which the board believes holds significant standalone value.
Paramount Skydance responded aggressively with a hostile all-cash tender offer of $30 per share for the entire company, including the cable assets—a premium over Netflix's valuation but one that WBD has consistently deemed illusory due to execution risks. The bidder's plan involves acquiring all of WBD, integrating its operations with Paramount's existing portfolio (including CBS, Nickelodeon, and Paramount Pictures), and assuming substantial new debt to bridge the financing gap. Reports indicate Paramount Skydance would need to secure over $50 billion in additional borrowing through complex arrangements, amplifying leverage concerns in an industry already grappling with cord-cutting and streaming profitability challenges.
To bolster its proposal, Paramount Skydance announced amendments on December 22, 2025, including Larry Ellison's personal guarantee of $40.4 billion in equity contribution toward the transaction and an increased breakup fee of $5.8 billion to match Netflix's penalty clause. However, the per-share offer remained at $30, and the board's January 7 response dismissed these changes as insufficient, particularly criticizing Paramount's low valuation of the Discovery Global spin-off—at approximately $1 per share—versus WBD's more optimistic internal assessment.
The rejection marks the latest in a series of rebuffs, with WBD previously dismissing earlier iterations of the bid as "not more favorable" and fraught with regulatory and financing hurdles. Analysts note that while Paramount Skydance argues its deal could close faster (12-18 months) with potentially smoother antitrust approval—avoiding direct competition in streaming like a Netflix tie-up would entail—the WBD board prioritizes the derisked path of partnering with Netflix, a dominant player poised to integrate premium content like HBO's library to bolster its global subscriber base.
This development intensifies pressure on Paramount Skydance, led by David Ellison with backing from his father's vast resources and other investors. Options now include withdrawing the bid, sweetening the terms with a higher offer, or escalating the hostile approach by directly soliciting WBD shareholders through the ongoing tender offer (currently set to expire January 21, 2026, unless extended). A successful tender could force a shareholder vote to override the board's recommendation, though institutional investors' preferences remain a key variable.
The drama underscores broader consolidation trends in Hollywood, where legacy media giants face existential threats from tech-driven streamers. WBD, formed from the 2022 merger of WarnerMedia and Discovery, has struggled with debt loads exceeding $40 billion and declining linear TV revenues. A Netflix merger could provide scale and streaming synergy, while a full acquisition by the smaller Paramount Skydance risks creating a heavily indebted behemoth vulnerable to market shifts.
Market reactions were muted on January 7, with WBD shares trading steadily as investors digested the board's stance. Industry observers suggest the bidding war may not be over, with some speculating on counter-moves or third-party interest. Regulatory scrutiny looms large for either outcome, given antitrust concerns over media concentration.
As the tender offer deadline approaches, all eyes are on shareholder sentiment and whether Ellison's consortium can muster enough support to challenge the board's Netflix preference. For now, WBD remains committed to its chosen path, viewing the Paramount proposal as too precarious in an already volatile sector.
