Warner Bros. Discovery Expected to Reject Paramount’s Hostile Takeover Bid Over Financing Concerns

Warner Bros. Discovery appears poised to reject Paramount Skydance’s hostile takeover bid, according to several people familiar with the company’s internal review. The board, which has spent the past week evaluating Paramount’s offer, is expected to recommend that shareholders vote against the tender, citing concerns over financing, long-term stability, and the bid’s overall structure.

Sources say Warner Bros. Discovery still considers its existing $83 billion agreement with Netflix—which includes the sale of Warner Bros. Studios, HBO, and its streaming operations—to be the stronger and more reliable deal. Despite Paramount’s attempt to outbid Netflix, Warner executives reportedly believe Netflix offers clearer value and far greater certainty.

A formal response from Warner Bros. Discovery may be filed as early as Wednesday, though the situation has yet to be decided.

Financing Concerns at the Center of Warner Bros.’ Objections

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One of the key issues troubling Warner Bros. is the financing structure behind Paramount Skydance’s offer. The bid is led by Skydance CEO David Ellison and backed in part by a revocable trust connected to his father, Oracle founder Larry Ellison. Because the trust’s assets can be removed at any time, Warner Bros. fears it could be left without financial recourse if the money were withdrawn after an agreement is struck.

Compounding the instability, one of Paramount’s financial partners, Affinity Partners, led by Jared Kushner, withdrew from the deal on Tuesday. The firm told Bloomberg it was walking away because of involvement by “two strong competitors,” a reference to Netflix and Comcast, which had participated in earlier bidding rounds.

Paramount has already adjusted its proposal more than once. It recently removed a $1 billion financing component from China’s Tencent due to potential national security objections from U.S. regulators.

Warner Bros. Againt Delays and Restrictions With Paramount’s Bid

Beyond financing, Warner Bros. Discovery is concerned about a long regulatory approval period. Executives fear the company could be constrained for a year or more while awaiting antitrust review. According to insiders, Paramount’s terms would not give Warner Bros. enough freedom to manage its debt or conduct normal business during that period, making the offer less appealing.

Paramount has argued that its revised bid addresses those concerns by allowing more flexibility for refinancing and by offering a $5 billion breakup fee covered by the Ellison family. But Warner Bros. Discovery’s board reportedly remains unconvinced.

Netflix Agreement Still Seen as Superior

Warner Bros. finalized its agreement with Netflix earlier this month, accepting an offer valued at $27.75 per share, or about $83 billion including debt. Under that deal, the company will sell its studios and key streaming assets to Netflix while spinning off cable networks such as CNN and TNT to shareholders.

Although the agreement prevents Warner Bros. from actively soliciting rival proposals, it is allowed to review unsolicited bids like Paramount’s. If Paramount presents what the board deems a “superior proposal,” Netflix will still have the right to match it.

Paramount’s Bid Remains on the Table — but for How Long?

Paramount Skydance launched its public tender offer three days after the Netflix deal was announced, offering $30 per share, or more than $108 billion including debt. The company has signaled its proposal is “not best and final,” indicating it may increase the price.

Internal sentiment at Warner Bros. appears to be leaning decisively toward Netflix, setting up a likely rejection of Paramount’s offer in the coming days.

Source- Bloomberg