Warner Bros. Discovery’s board unanimously rejected Paramount Skydance’s revised $108.4 billion bid for the company on Wednesday, labeling it a leveraged buyout that would load $87 billion in debt onto the firm. The decision came in a letter to shareholders urging support for the prior $82.7 billion Netflix agreement.
The rejection addresses an ongoing bidding contest for Warner Bros. Discovery, which holds a vast library including the Harry Potter franchise, Game of Thrones series, and DC Comics titles. Paramount Skydance, previously rumored as a potential buyer before the Netflix announcement, approached shareholders directly in early December with an all-cash offer of $30 per share. This move followed Warner Bros. Discovery’s board decision to pursue the Netflix sale.
Warner Bros. Discovery dismissed the initial Paramount proposal as illusory, asserting that Paramount lacked the cash reserves to execute it. The company directed shareholders toward the Netflix cash-and-share transaction instead, emphasizing its reliability over the unbacked bid.
Paramount responded by revising its offer, securing a $40 billion guarantee from Larry Ellison, the billionaire co-founder of Oracle and father of Paramount CEO David Ellison. The updated plan included raising $54 billion in debt to finance the acquisition, aiming to strengthen the proposal’s credibility.
Warner Bros. Discovery remained unpersuaded by the changes. In its statement, the company detailed the financial mismatch: Paramount, valued at a $14 billion market capitalization, seeks $94.65 billion in debt and equity financing for the deal, equivalent to nearly seven times its total market capitalization. The firm stated, “[Paramount] is a company with a $14 billion market capitalization attempting an acquisition requiring $94.65 billion of debt and equity financing, nearly seven times its total market capitalization … This aggressive transaction structure poses materially more risk for WBD and its shareholders when compared to the conventional structure of the Netflix merger.”
Beyond the financing scale, Warner Bros. Discovery raised concerns about Paramount’s post-acquisition operations. The company argued that incurring such debt levels would deteriorate Paramount’s existing junk credit rating, complicating its ongoing functionality.
