Warner Bros. Discovery Board Rejects Paramount’s $108 Billion Bid, Backs Netflix Deal

Industry News

by Nino LeitnerDecember 18^th, 2025

Subscribe to News - Industry

Warner Bros. Discovery’s board has unanimously rejected Paramount Skydance’s hostile takeover offer, declaring that David Ellison’s $108.4 billion all-cash bid poses significant risks and that the Ellison family has “consistently misled” shareholders about their financial backing.

The decision marks a dramatic escalation in the battle for one of Hollywood’s oldest studios, with board chairman Samuel Di Piazza Jr. stating that choosing Netflix’s $82.7 billion deal over the Paramount offer was “not a hard choice.” The rejection sets up a potential confrontation with Paramount, which has indicated it will forge ahead with its $30 per share tender offer directly to shareholders.

What’s behind the board’s rejection

Warner Bros. Discovery’s board raised serious concerns about the financial structure underpinning Paramount’s bid. Despite Paramount’s claims that the transaction has a “full backstop” from the billionaire Ellison family, Warner Bros. Discovery said in a letter to shareholders that “it does not, and never has.”

The core issue centers on the legal entity backing the bid: a revocable trust run by Oracle co-founder Larry Ellison. Warner Bros. Discovery argued that a revocable trust provides no replacement for a secured commitment by a controlling stockholder, noting that its assets and liabilities are not publicly disclosed and remain subject to change at any time. The board said it had repeatedly told Paramount about the importance of a full and unconditional financing commitment from the Ellison family.

Beyond the financing structure, Warner Bros. Discovery questioned the creditworthiness of Paramount itself. The board noted that the bid relies on a $15 billion market cap company with a credit rating at or only a notch above “junk” status from the two leading rating agencies. Paramount’s proposed $9 billion in synergies, the board added, are “both ambitious from an operational perspective and would make Hollywood weaker, not stronger.”

Six proposals over twelve weeks

Paramount CEO David Ellison made a total of six offers for Warner Bros. Discovery over a twelve-week period. Despite arguments of “air-tight financing” and an easy path to regulatory approval within 12 months, the board remained unconvinced.

Di Piazza Jr. dismissed allegations that the board ignored the $30 per share offer and ran a “murky” sale process. “After each of their proposals, we told them, as we did the other bidders, what you needed to do to reach our expectation. They chose not to,” he said in an interview with CNBC. “And in the end, the board’s responsibility is to take the highest value considering the risk and the other implications.”

The sale process involved dozens of calls and meetings with Paramount, including four in-person meetings and meals between Warner Bros. Discovery CEO David Zaslav and one or more of the Ellisons. According to legal filings, Zaslav told the board that the Ellisons offered him a compensation package worth several hundred million dollars if a deal was reached. Zaslav reportedly informed the Ellisons that it would be “inappropriate to discuss any such arrangements at that time.”

The Netflix deal breakdown

Netflix’s offer is valued at $27.75 per Warner Bros. Discovery share through a combination of cash, stock, and committed debt financing from Wells Fargo, BNP, and HSBC. Shareholders would receive additional value from the planned separation of Discovery Global in the third quarter of 2026.

The deal structure differs fundamentally from Paramount’s approach. Netflix seeks to acquire Warner Bros.’ movie studio and HBO Max streaming service, gaining access to a vast content library and iconic franchises including Batman, Harry Potter, and Bugs Bunny. The streaming giant would not acquire the company’s cable television networks, leaving Warner Bros. Discovery to spin off assets like CNN and TNT into a separate entity before the takeover closes.

Paramount, by contrast, wanted to acquire Warner Bros. Discovery in its entirety, including competitors to its own channels such as CBS, MTV, and Showtime. This comprehensive approach raised potential regulatory concerns about consolidation in the entertainment industry.

Cable network valuation dispute

A significant point of contention involves the valuation of Warner Bros. Discovery’s cable networks business. Ellison and Paramount valued these assets at $1 per share, while Warner Bros. Discovery’s board sided with analysts who have pegged the valuation between $3 and $5 per share.

Di Piazza Jr. expressed concern about the risk of being stuck with these assets if the Paramount deal fell apart. “We just don’t think that that was a risk worth taking,” he said. The Netflix deal’s structure, which excludes the cable networks, allows Warner Bros. Discovery to handle that business separately.

Regulatory considerations and breakup fees

Warner Bros. Discovery said its board did not believe there was a “material difference” in the regulatory risks facing either the Paramount or Netflix deals in the United States and abroad. Di Piazza Jr. described the Netflix deal as offering “a clean, a direct path to closure.”

The financial protections in each deal also favor Netflix from the board’s perspective. Netflix has agreed to pay a $5.8 billion fee if regulators block the transaction, compared to Paramount’s $5 billion offer. If Warner Bros. Discovery ultimately chooses another bidder, it would owe Netflix a $2.8 billion breakup fee.

Netflix co-CEO Ted Sarandos called the company’s merger agreement “superior” and “in the best interest of stockholders,” while Netflix’s leadership team emphasized their offer’s “superior financing certainty and clear funding structure.”

What happens next

Paramount has indicated it will hold firm on its $30 per share tender offer, though David Ellison has previously stated that his latest bid is not “best and final.” This leaves open the possibility of a raised offer.

Di Piazza Jr. declined to speculate on whether an increased bid would change anything, but noted that the equity price is just one consideration. “We have a bridge loan to finance. And if we don’t finance it, we get in real trouble. And the Paramount Skydance deal is short in that space, and we told them that over and over,” he said.

The Warner Bros. Discovery board told bidders to submit their “best shot” before entering the Netflix deal. Di Piazza Jr. made clear the company had no obligation to come back and renegotiate. Shareholder votes on the Netflix deal are expected in spring or early summer.

Industry implications

The battle for Warner Bros. Discovery represents more than a corporate takeover; it reflects the shifting power dynamics in Hollywood. The Writers Guild of America’s East and West branches have called for the Netflix merger to be blocked, arguing it would result in lower wages, job cuts, and reduced content volume for viewers.

A new owner of Warner Bros. would gain significant advantages in the competitive streaming market. The acquisition would bring under one roof an extensive library of films and television shows, alongside the HBO Max streaming service. Netflix’s subscriber base already far outpaces other paid streaming services, and adding Warner Bros.’ content would further cement its dominant position.

David Zaslav’s reputation has undergone a notable transformation through this process. Earlier in the year, Warner Bros. Discovery shares had slumped to around $7.50, down from nearly $25 when he took over three years prior. The company’s movie studio has since delivered multiple hits, including two films in contention for best picture at the Academy Awards. Warner Bros. Discovery stock closed at $28.90 ahead of the board’s announcement.

With Paramount signaling it remains undeterred and the possibility of a raised bid still on the table, this Hollywood takeover saga is far from over. Do you think the Warner Bros. Discovery board made the right call in favoring Netflix’s offer, and how might this consolidation reshape the streaming landscape? Don’t hesitate to let us know in the comments below!