Warner Bros. Discovery’s board unanimously rejected Paramount Skydance’s revised $108 billion hostile takeover bid on January 7, 2026, citing excessive debt risks and inferior terms compared to its pending Netflix merger.[1][2]
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Board’s Core Objections: Debt Overload and Execution Risks
The WBD board highlighted the bid’s reliance on an “extraordinary amount of incremental debt,” positioning it as the largest leveraged buyout in history and introducing substantial financing uncertainties.[1] Unlike the Netflix deal’s traditional structure, Paramount’s proposal depends heavily on lenders’ willingness to fund at closing, vulnerable to market shifts or industry disruptions.[1] Despite Larry Ellison’s $40.4 billion personal equity guarantee—provided by Oracle’s chair and father of Paramount CEO David Ellison—the board dismissed it, emphasizing overall risks to shareholders.[1]
Accepting the bid would trigger a $0.8 billion termination fee to Netflix, a $1.5 billion charge for scrapping WBD’s debt exchange, and roughly $350 million in added interest costs, eroding shareholder value.[1]
Financial Terms and Bid Evolution
Paramount’s latest offer, amended December 22, maintains a $30 per share all-cash bid without increases since early December, despite addressing prior concerns.[1][2] Valued at $108 billion, it targets WBD’s full equity amid a competitive auction process launched in October after three initial unsolicited bids were rebuffed.[1]
| Bidder | Offer Structure | Key Risks/Advantages |
|---|---|---|
| Paramount Skydance | $30/share all-cash; $40.4B Ellison guarantee | High debt ($108B LBO); regulatory scrutiny on news assets |
| Netflix | Traditional merger (terms undisclosed) | Lower execution risk; $0.8B termination penalty if abandoned |
Strategic Context in Media M&A Landscape
WBD’s sales process drew bids from Paramount, Netflix, and Comcast, culminating in the Netflix selection that prompted Paramount’s hostile tender offer directly to shareholders.[1] Paramount claims superior financing and lighter regulatory hurdles, but WBD counters that Ellison family ties and potential conservative shifts in CBS News/CNN assets—allegedly pitched to President Trump—raise completion doubts.[1]
This standoff reflects broader **media M&A trends 2026**, where streaming giants like Netflix pursue scale amid cord-cutting, while leveraged bids face lender scrutiny in a high-interest environment. McKinsey’s 2025 Media Report notes 40% of deals over $50 billion involve regulatory blocks, amplifying WBD’s caution on Paramount’s structure.
Potential Escalation: Litigation Looms
WBD’s filing labels Paramount Skydance a “lit counterparty,” questioning bid viability.[1] Reports suggest Paramount may drop the pursuit for legal challenges over WBD’s auction handling, echoing activist investor disputes in recent **hostile takeover strategies in media sector**.[1]
- Shareholder Implications: Tender offer risks dilution if accepted; Netflix path prioritizes stability.
- Industry Ripple: Could deter aggressive LBOs in entertainment, favoring cash-rich acquirers like Netflix.
- Next Steps: Watch for tender deadline, FCC review, or proxy fight as **private equity exit strategies in media** evolve.
For C-level executives eyeing **cross-border M&A trends 2025-2026**, this underscores financing guarantees’ limits against debt overhang in mega-deals.
Sources
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https://www.axios.com/2026/01/07/warner-bros-reject-paramount-netflix-wbd-stock, https://ir.wbd.com/news-and-events/financial-news/financial-news-details/2026/WARNER-BROS--DISCOVERY-BOARD-OF-DIRECTORS-UNANIMOUSLY-RECOMMENDS-SHAREHOLDERS-REJECT-AMENDED-PARAMOUNT-TENDER-OFFER/default.aspx
