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Warner Bros. Discovery Board Urges Shareholders to Reject Paramount Bid, Backs Netflix $72B Deal

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Board Recommends Rejecting Paramount, Endorses Netflix Deal On Jan 7 2026 Warner Bros. Discovery’s board sent a shareholder letter urging rejection of Paramount’s amended hostile bid and support for the previously announced Netflix transaction. The board labeled the Paramount proposal “inferior” and “inadequate,” citing the risk of more than $50 billion of incremental debt. It emphasized that the Netflix deal offers “superior value and greater certainty” for investors. All three outlets reported the same recommendation. [1][2][3]

Paramount’s Updated Offer Leverages Ellison Guarantee and Breakup Fee Paramount’s latest bid values Warner at $77.9 billion, or $30 per share, and relies on an “extraordinary amount of debt financing” that the board says could jeopardize closing. Oracle founder Larry Ellison provided an irrevocable personal guarantee for $40.4 billion of equity financing and matched Netflix’s $5.8 billion breakup fee to address shareholder concerns. The offer also includes a clause that would acquire the entire company, including CNN and other cable properties, unlike Netflix’s narrower scope. [1][3]

Netflix Agreement Targets Studio and Streaming Assets Only Netflix’s proposal, announced in early December and reaffirmed on Jan 7, totals $72 billion and covers Warner’s film studio and streaming platforms such as HBO Max, while CNN and other cable assets will be spun off later in the year. The transaction values each share at $27.75, composed of $23.25 in cash and the balance in Netflix stock. Warner’s management presented the Netflix deal as the outcome of an auction process, arguing it provides immediate cash and a clear path forward. [1][2][3]

Regulatory Hurdles and Shareholder Vote Remain Decisive Both bids face extensive antitrust review that could extend beyond a year, with the U.S. Justice Department expected to scrutinize the scale of either transaction. The board warned that Paramount’s debt‑heavy structure increases the risk of a regulatory block, whereas Netflix’s cash‑plus‑stock structure is viewed as more defensible. Shareholders retain the power to override the board’s guidance by voting, which would force Paramount either to raise its offer, walk away, or trigger a formal shareholder vote. [1][2]

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Timeline

Early Dec 2025 – Warner Bros. Discovery announces a definitive agreement with Netflix to sell its film and streaming businesses for $72 billion, valuing the company at $27.75 per share ($23.25 cash plus Netflix stock) and setting the stage for a split into two divisions later in 2026. [1][2]

Mid‑Dec 2025 – Netflix co‑CEO Ted Sarandos tells staff the transaction “is in the best interest of stockholders,” reinforcing Warner’s board’s preference for the Netflix deal over any hostile offers. [1]

Late Dec 2025 – Paramount, backed by David Ellison’s unsolicited approach and financing from the Ellison family, launches a hostile takeover bid valued at more than $108 billion, prompting Warner’s board to issue its first recommendation that shareholders reject the offer. [1]

Early Jan 2026 – Paramount amends its proposal, keeping a $30‑per‑share price, securing an “irrevocable personal guarantee” from Larry Ellison for $40.4 billion of equity, and raising the breakup fee to $5.8 billion to match Netflix’s terms, yet it does not increase the per‑share price. [2][3]

Jan 7, 2026 – Warner Bros. Discovery’s board unanimously advises shareholders to reject Paramount’s revised hostile bid, labeling it “inadequate” and a leveraged buyout that would add “more than $50 billion” of incremental debt, while reiterating that the Netflix merger offers superior value and certainty. [2]

Jan 7, 2026 – Chair Samuel Di Piazza Jr. states the Paramount offer “continues to provide insufficient value” and relies on an “extraordinary amount of debt financing,” contrasting it with the Netflix agreement’s lower risk profile. [1]

Jan 7, 2026 – The board’s letter highlights that Warner would owe Netflix a $2.8 billion breakup fee if it abandons the deal, notes Paramount’s market value of about $14 billion versus its request for over $94 billion in debt and equity financing, and flags the heavy leverage as a deal‑closing risk. [1]

Jan 7, 2026 – Warner’s leadership reaffirms its push for shareholders to approve the $72 billion Netflix sale, emphasizing that the transaction delivers clear value and certainty compared with Paramount’s all‑company bid that includes CNN, TNT, Discovery and European assets. [3]

Jan 7, 2026 – The board outlines Paramount’s three possible next steps—walk away, raise the bid, or force a shareholder vote—making clear that ultimate control could still rest with shareholders despite management’s recommendation. [2]

Later 2026 – Warner plans to split into two separate entities, with the Netflix deal covering the studio and streaming units while the news and cable businesses (including CNN) remain in a spun‑off company. [1]

2026‑2027 (future) – The merger faces a lengthy antitrust review that could exceed one year, with U.S. Justice Department and foreign regulators expected to scrutinize the deal amid political pressure under President Donald Trump and industry concerns about competition, jobs and filmmaking diversity. [3]

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