TL;DR
Warner Bros. Discovery’s board unanimously turned down Paramount Skydance’s revised $108.4 billion proposal, saying it would burden the company with roughly $87 billion in debt. WBD urged shareholders to back its earlier $82.7 billion agreement with Netflix for the studio assets.
What happened
Warner Bros. Discovery (WBD) announced a unanimous board decision to reject Paramount Skydance’s revised $108.4 billion acquisition offer, characterizing the structure as a leveraged buyout that would load roughly $87 billion of debt onto the company. In a letter to shareholders, WBD argued that the magnitude of debt Paramount would need to raise increases the chance the transaction could fail and recommended that investors approve WBD’s prior agreement to sell its film and TV studio assets to Netflix for $82.7 billion. Paramount had earlier gone directly to shareholders with an all-cash $30-per-share bid and later secured a $40 billion guarantee from Larry Ellison, while proposing to raise about $54 billion in debt. WBD questioned Paramount’s capacity to absorb such financing, citing the buyer’s much smaller market capitalization and its current credit profile, and contrasted Paramount’s proposal with Netflix’s larger market cap, investment-grade balance sheet and projected free cash flow.
Why it matters
- A high-debt acquisition could increase the risk that the transaction collapses, affecting shareholder value and strategic planning.
- Control of WBD’s content library would shift competitive dynamics among streaming platforms and studios if a sale proceeds.
- The dispute highlights the role of financing structure and creditworthiness in large media M&A, not just headline prices.
- Shareholder and financing decisions here may influence how future megadeals are structured in the entertainment sector.
Key facts
- WBD’s board unanimously rejected Paramount Skydance’s revised $108.4 billion offer.
- WBD said the proposal amounted to a leveraged buyout that would saddle the company with about $87 billion in debt.
- WBD recommended shareholders vote in favor of its earlier $82.7 billion deal with Netflix for its film and TV studio assets.
- Paramount initially submitted an all-cash $30-per-share offer directly to shareholders in early December.
- Paramount later added a $40 billion guarantee from Larry Ellison and planned to raise $54 billion in debt to fund the acquisition.
- WBD noted Paramount’s roughly $14 billion market capitalization versus the roughly $94.65 billion of debt and equity financing the deal would require.
- Warner Bros. said raising that debt would further strain Paramount’s already weak credit rating (described as “junk”).
- WBD contrasted Paramount with Netflix, citing Netflix’s approximately $400 billion market capitalization, investment-grade balance sheet, and estimated free cash flow of more than $12 billion for 2026.
- Netflix issued a statement welcoming WBD’s decision and endorsing the proposed merger terms.
What to watch next
- Outcome and timing of any shareholder votes on WBD’s recommendation and Paramount’s proposal — not confirmed in the source.
- Whether Paramount can secure the full debt and equity financing it says is available for the bid, including any additional guarantees — not confirmed in the source.
- Regulatory review or antitrust scrutiny that could affect either potential deal — not confirmed in the source.
Quick glossary
- Leveraged buyout (LBO): An acquisition in which a significant portion of the purchase price is financed with borrowed money, using the target’s assets or cash flows as collateral.
- Market capitalization: The total market value of a company’s outstanding shares, calculated by multiplying the share price by the number of shares.
- Free cash flow: Cash a company generates after accounting for cash outflows to support operations and maintain its capital assets; often used to assess financial flexibility.
- Investment-grade credit rating: A credit rating that indicates relatively low risk of default; typically assigned by rating agencies and can reduce borrowing costs.
- All-cash offer: A purchase proposal where the buyer offers cash rather than stock or other securities as consideration.
Reader FAQ
Did Warner Bros. Discovery accept Paramount’s offer?
No. WBD’s board unanimously rejected Paramount Skydance’s revised $108.4 billion bid.
How much debt did WBD say Paramount’s deal would add?
WBD stated the proposal would saddle the company with about $87 billion in debt.
What deal is WBD urging shareholders to support?
WBD recommended shareholders approve its earlier $82.7 billion agreement to sell film and TV studio assets to Netflix.
Has Paramount fully secured the financing for its bid?
Paramount announced a $40 billion guarantee from Larry Ellison and plans to raise $54 billion in debt, but whether all financing is fully secured is not confirmed in the source.
The bidding war for Warner Bros. Discovery (WBD) and its extensive library of hit TV shows and films like “Harry Potter,” “Game of Thrones” and the DC Comics titles, is…
Sources
- Warner Bros. Discovery rejects Paramount’s bid again, calls it a ‘leveraged buyout’
- Warner Bros rejects revised Paramount bid as risky …
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