Warner Bros rejects revised Paramount bid as risky leveraged buyout
The board called Paramount’s offer too risky, citing massive debt and uncertainty, and said the Netflix acquisition provides more value and a safer path forward.
Warner Bros Discovery logo is seen in this illustration taken Dec 5, 2025. (Photo: REUTERS/Dado Ruvic)
LOS ANGELES: Warner Bros Discovery's board has unanimously turned down Paramount Skydance's latest attempt to acquire the studio, saying its revised US$108.4 billion hostile bid amounted to a risky leveraged buyout that investors should reject.
In a letter to shareholders on Wednesday (Jan 7), Warner Bros' board said Paramount's offer hinges on "an extraordinary amount of debt financing" that heightens the risk of closing. It reaffirmed its commitment to streaming giant Netflix's US$82.7 billion deal for the film and television studio and other assets.
Paramount and Netflix have been vying to win control of Warner Bros, and with it, its prized film and television studios and its extensive content library. Its lucrative entertainment franchises include Harry Potter, Game of Thrones, Friends and the DC Comics universe, as well as coveted classic films such as Casablanca and Citizen Kane.
Paramount's financing plan would saddle the smaller Hollywood studio with US$87 billion in debt once the acquisition closed, making it the largest leveraged buyout in history, the Warner Bros board told shareholders after voting against the US$30-per-share cash offer on Tuesday. The letter accompanied a 67-page amended merger filing where it laid out its case for rejecting Paramount's offer.
NETFLIX DEAL ON TRACK
The revised Paramount offer "remains inadequate particularly given the insufficient value it would provide, the lack of certainty in PSKY’s ability to complete the offer, and the risks and costs borne by WBD shareholders should PSKY fail to complete the offer," the Warner Bros board wrote.
Their assessment comes even after Paramount, which has a market value of around US$14 billion, proposed to use US$40 billion in equity personally guaranteed by Oracle ORCL.N billionaire co-founder Larry Ellison - father of Paramount CEO David Ellison - and US$54 billion in debt to finance the deal.
The decision keeps Warner Bros on track for its deal with Netflix, even after Paramount amended its bid on Dec 22 to address the earlier concerns about the lack of a personal guarantee from Larry Ellison.
Netflix co-CEOs Ted Sarandos and Greg Peters welcomed Warner Bros' decision on Wednesday, saying it recognizes the streaming giant's deal "as the superior proposal that will deliver the greatest value to its stockholders, as well as consumers, creators and the broader entertainment industry."
Paramount's financing plan would further weaken its credit rating, which S&P Global already rates at junk levels, and strain its cash flow – heightening the risk that the deal will not close, the Warner Bros board said. Netflix, which has offered US$27.75 a share in cash and stock, has a US$400 billion market value and investment-grade credit rating.
