Warner Bros. Discovery's board is poised to reject Paramount Skydance's latest acquisition offer, signaling a continued commitment to its existing merger with Netflix. This decision comes despite Paramount's efforts to enhance its bid, including a substantial personal financial guarantee from Larry Ellison. The unfolding drama underscores the intense competition within the entertainment industry and WBD's strategic alignment with Netflix for its future growth.
The saga highlights Warner Bros. Discovery's determination to proceed with its Netflix merger, a deal valued at over $80 billion. This steadfastness indicates the board's confidence in the Netflix partnership as the most beneficial path forward, overriding the appeal of rival proposals. The anticipated rejection sets the stage for further developments in this high-stakes corporate maneuvering.
WBD Rejects Paramount Skydance Bid
Warner Bros. Discovery's board is expected to turn down Paramount Skydance's revised acquisition proposal. This move reinforces WBD's ongoing commitment to its existing merger agreement with Netflix, valued at more than $80 billion. The board's decision, anticipated to be formalized next week, indicates a clear preference for the Netflix deal despite Paramount Skydance's persistent pursuit. The initial offer from Paramount Skydance was met with a lukewarm response, and even an amended bid with stronger financial backing appears insufficient to sway WBD. This situation underscores the strategic importance of the Netflix partnership for Warner Bros. Discovery's long-term vision and market position.
Bloomberg News recently reported that the Warner Bros. Discovery board intends to reject the updated takeover offer from Paramount Skydance, which was publicly announced on December 22nd. WBD has already entered into a substantial merger agreement with Netflix, a deal valued at over $80 billion. Paramount Skydance, however, has not conceded, continuing its efforts to acquire WBD assets by making a tender offer directly to shareholders. This corporate struggle has led to a significant surge in WBD's stock value, increasing by over 170% this year, albeit from a previously low point. The board's formal vote next week will likely confirm its decision to adhere to the Netflix agreement, signifying a pivotal moment in the competitive landscape of media consolidation.
Strategic Alignment with Netflix
The anticipated rejection by the Warner Bros. Discovery board is not surprising, reflecting a consistent strategic outlook regarding the optimal partner for its core brands, including Warner Bros. and HBO Max. The company appears to view its merger with Netflix as the best fit, a decision that has remained firm despite external pressures. This steadfastness also raises questions about the extent to which Paramount Skydance is willing to further increase its financial offer beyond the current $30 per share. The current deal with Netflix, a combination of cash and stock, is valued slightly under $83 billion and specifically excludes certain linear cable channels, distinguishing it from Paramount's broader, all-cash offer.
Paramount Skydance's amended offer, presented on December 22nd, primarily focused on the financial aspects of its all-cash transaction. Software billionaire Larry Ellison, father of David Ellison, took a significant step by personally guaranteeing $40.4 billion towards Paramount's total $108 billion all-cash offer for WBD. This comprehensive offer included assets like CNN and TNT, which are slated for spinoff into a separate entity next year under the current WBD-Netflix plan. Furthermore, Paramount's revised bid increased the breakup fee to match Netflix's $5.8 billion, payable if regulatory approvals for the deal fall through. Should WBD's rejection prompt Paramount to sweeten its offer further, the ball would then be in Netflix's court to respond, although its willingness to increase its bid remains uncertain, suggesting a potential strategic advantage for Netflix if WBD maintains its current course.