Warner Bros. Discovery Turns Down Paramount’s $30-Per-Share Offer, Citing “Insufficient Value”

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Warner Bros. Discovery has turned down Paramount and Skydance’s offer to buy the company for $30 per share, stating that the price is too low and the deal involves unacceptable risks. The company’s board of directors shared their reasoning with shareholders in a letter released on Tuesday.

Paramount and Skydance were considering a deal worth $108.4 billion. Oracle’s Larry Ellison pledged to personally guarantee $40.4 billion in funding for the deal, and there was also a $5.8 billion penalty if the agreement fell through.

Even with these steps taken, Warner Bros. Discovery’s board felt the offer was too low and wouldn’t benefit the company financially or practically.

The board stated they believe the company fully understands why they chose the merger with Netflix over the other offer. They explained that accepting the Paramount deal would result in $4.7 billion in extra expenses – things like cancellation fees, penalties for changing debt, and increased interest payments – costs that the Netflix merger avoids.

Paramount’s proposed buyout plan is complicated and carries significant risks. It would require $94.65 billion in funding – roughly seven times the company’s current value – and depend heavily on borrowing money from banks and investors. Warner Bros. Discovery has expressed concern that this financial structure increases the likelihood the deal could fall through, which would negatively impact shareholders.

The board stated that PSKY already has a poor credit rating and is losing money, relying heavily on its traditional TV business. They also pointed out that the offer would limit Warner Bros. Discovery’s ability to operate freely, impacting important deals and future plans for as long as 18 months.

Unlike the other deal, Netflix is a much more financially secure company. It’s currently valued at $400 billion, has a strong financial standing, and is projected to generate over $12 billion in free cash flow by 2026.

Warner Bros. Discovery’s board stated that the agreement with Netflix will let the company operate as usual until the deal is finalized. It also safeguards shareholders with a $5.8 billion penalty if the deal falls through, and ensures key plans, such as the potential spin-off of Discovery Global in 2026, can move forward.

David Ellison’s Paramount Skydance made six offers to Warner Bros. Discovery (WBD) over three months, but WBD repeatedly considered them too low. Although the board is urging shareholders not to sell their shares to Paramount, the offer is still valid until January 21st. Shareholders could still accept the offer even without the board’s approval if they collectively own 90% of the company.

Netflix wasn’t surprised by the decision. In a statement, co-CEOs Ted Sarandos and Greg Peters explained that Warner Bros. Discovery’s board still believes the merger with Netflix is the best option, offering the most benefits for shareholders, viewers, content creators, and the entertainment industry as a whole. They highlighted that the two companies have complementary strengths and a mutual love for creating stories.

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2026-01-07 15:45