Warner Bros. Discovery Urges Shareholders to Reject Paramount’s Hostile Bid, Accuses Ellison Team of Misleading Financing Claims

For executives and investors evaluating hostile approaches, the core issues WBD highlights are clear: certainty of cash at close (equity backstops and non‑revocable commitments), regulatory exposure linked to foreign financing, and the strategic tradeoffs between an all‑cash hostile offer and a negotiated merger that may preserve more value across assets (e.g., Netflix’s proposed treatment of studios and streaming vs. Paramount’s all‑in acquisition)[1][2].

Financing and credibility: the Ellison question

Warner’s public statement singles out the Ellison family’s failure to provide an unconditional equity commitment — a central plank of WBD’s objection — and rejects reliance on a revocable trust as insufficient for deal certainty[2].

Outside reports document withdrawals or changes among financing partners (including a reported pullback of roughly $1 billion of Tencent financing and the exit of other backers), which bolster Warner’s argument that Paramount’s funding picture was fluid and potentially fragile[1][3].

Deal mechanics and strategic implications

• Netflix offer vs. Paramount tender: Netflix’s merger agreement with WBD (announced earlier) leaves certain cable networks outside the streaming combination and is structured as a negotiated transaction the board believes is more certain and higher‑value for shareholders[1][2].
• Hostile route risks: A hostile tender financed by conditional commitments increases execution risk, invites regulatory and political scrutiny, and can unsettle strategic counterparties and lenders—factors acutely relevant for media conglomerates with national‑security and political visibility[1][3].
• Potential outcomes: If shareholders follow the board’s recommendation, Paramount’s tender could fail to reach the threshold to close; alternatively, Paramount could improve terms or secure firmer commitments (including from the Ellison family) and relaunch a superior offer, though WBD says PSKY’s current offer is “nearly identical” to a previously rejected proposal[2].

Market and regulatory context

Several broader themes shape the contest: rising scrutiny of cross‑border financing in marquee media deals; political sensitivity around ownership of news assets (notably CNN); and activist or strategic investor reactions to hostile bids for national media companies[1][3]. These dynamics make financing certainty and transparent sponsor commitments especially important in 2025‑era mega‑deals.

Board playbook and precedents for C‑suite and boards

For management teams and boards facing hostile approaches, WBD’s stance underscores practical defensive steps:

• Insist on unconditional equity backstops from sponsor families or bidders before accepting tender‑offer financing claims[2].
• Document and disclose material changes in bidder financing and reliance on third‑party capital providers to sharpen shareholder decision‑making[2][1].
• Evaluate superior proposal criteria against the merger agreement and obtain independent financial and legal advice to support recommendations to shareholders[2].

What to watch next

• Whether Paramount secures an unconditional equity commitment from the Ellison family or other backers that addresses WBD’s financing objections[2].
• Shareholder response to the board’s recommendation — trading in WBD stock suggests some investors expect a higher bid, but the board’s legal and financial framing could sway institutional holders[1].
• Regulatory signals and any governmental scrutiny triggered by foreign financing elements or political controversies tied to bidders and financiers[1][3].

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Sources and reporting

• Fortune reporting on Warner Bros.’ planned rejection of the Paramount bid and financing concerns[1].
• Warner Bros. Discovery press release detailing the Board’s unanimous recommendation to reject Paramount’s tender offer and the claim that the Ellison family has not provided an equity backstop[2].
• Coverage of shifting financing partners, including the reported exit of Affinity Partners and other financiers, which adds context to financing fragility and political considerations[3].