Warner Bros. Discovery is preparing to recommend that shareholders reject Paramount Skydance’s hostile takeover offer, backing its existing agreement with Netflix instead, according to reports citing people familiar with the matter. The board believes Paramount’s proposal does not match the value, certainty and structure of the Netflix deal and is expected to formally advise investors to turn it down in the coming days.
A key concern for Warner Bros. is the financing behind Paramount’s bid. Part of the funding is tied to a revocable trust linked to the Ellison family, raising questions about the reliability of the capital and the company’s ability to seek recourse if backing changes. These worries have been amplified after Affinity Partners, led by Jared Kushner, withdrew its support for the transaction, citing the presence of competing bidders.
Directors are also wary of the operational constraints Warner Bros. could face during what may be a prolonged regulatory review. They believe Paramount’s offer leaves limited flexibility to manage the business and balance sheet during an approval process that could stretch over a year or longer.
Paramount has attempted to address some objections, stating in recent filings that issues around debt refinancing and a $5 billion breakup fee have been resolved and would be supported by the Ellison family. However, parts of the financing have already shifted, including the withdrawal of around $1 billion from Tencent amid potential national security concerns.
Paramount’s all-cash bid values Warner Bros. at more than $108 billion including debt. It moved directly to shareholders with a public tender offer days after Warner Bros. and Netflix announced their agreement. Under that deal, Warner Bros. cannot actively seek rival bids but can consider unsolicited proposals, while giving Netflix the right to match any superior offer.