Warner Bros. Discovery Board Dismisses Paramount Skydance Bid, Stays Committed to $72 Billion Netflix Merger

The board of directors of Warner Bros. Discovery (WBD) on Wednesday repeated its unanimous recommendation that shareholders vote against a hostile takeover proposal from Paramount Skydance, reaffirming its commitment to a previously signed agreement to merge WBD’s studio and streaming operations with Netflix for $72 billion.

Chairman Samuel Di Piazza outlined the board’s position during an interview on CNBC’s “Squawk Box,” emphasizing what he called “a compelling value” reflected in the Netflix transaction. The merger agreement, formally announced in early December, covers WBD’s film studio, HBO-branded assets, the Max streaming service and other direct-to-consumer businesses. It also includes provisions designed to protect WBD investors if the deal does not close.

Paramount Skydance responded to the Netflix announcement by approaching WBD shareholders directly with a cash offer of $30 per share for the entire company, including its portfolio of U.S. cable and broadcast networks. The bid, unveiled days after the Netflix pact, bypassed WBD management and was framed as a faster path to liquidity for shareholders. Paramount has made three formal proposals since September but has not increased the headline price despite feedback from WBD.

In a letter circulated Wednesday, WBD’s board said it had “extensively engaged” with Paramount Skydance representatives and had spelled out multiple concerns as well as possible solutions. According to the document, those concerns range from financing commitments to regulatory risk. “PSKY has continued to submit offers that still include many of the deficiencies we previously identified,” the board wrote, adding that none of those issues appear in the Netflix agreement.

Financing has been a central point in the negotiations. Late last year Paramount updated its proposal to include explicit support from Oracle co-founder Larry Ellison, father of Paramount Skydance Chief Executive David Ellison. In an amended term sheet, the elder Ellison pledged not to revoke the family trust or transfer assets in a manner that could impede the transaction. While that assurance addressed one question raised by WBD, the board said it remained concerned about other elements of the package, including the valuation and the absence of additional cash or stock sweeteners.

Di Piazza reiterated that the Netflix deal provides a “clear path to closing” because of detailed regulatory planning and negotiated reverse-termination fees. Those provisions require Netflix to pay WBD if antitrust or other government reviews derail the merger. The chairman did not disclose the magnitude of the fees, but people familiar with large U.S. media combinations note that break-up payments can reach into the billions of dollars, a practice explained by the U.S. Securities and Exchange Commission as a common risk-sharing mechanism in merger agreements.

The hostile nature of the Paramount bid places the decision formally in the hands of WBD shareholders. However, under Delaware corporate law, a target board may recommend for or against an unsolicited offer and is required to disclose its rationale. WBD’s directors have repeatedly labeled Paramount’s approach as “inferior” and said the Netflix agreement remains the best available option. The company has set a special meeting date for shareholders to vote on the Netflix transaction, though an exact day has not been made public.

Industry analysts have highlighted strategic differences between the two competing buyers. Netflix would integrate WBD’s marquee content, including Warner Bros. films and HBO series, into its global streaming platform, potentially accelerating subscriber growth and consolidating production capabilities. Paramount Skydance, by contrast, pitched a combination that would fold WBD assets into a portfolio anchored by Paramount Pictures, CBS and cable networks such as MTV and Nickelodeon. While that scenario could create a broad U.S. television footprint, skeptics point to possible antitrust concerns given overlapping cable holdings and the concentration of market share in film distribution.

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Regulatory scrutiny is expected regardless of which transaction moves forward. The Department of Justice and the Federal Trade Commission have both taken an aggressive stance on large technology and media deals in recent years. WBD cited the extensive regulatory planning embedded in the Netflix agreement as a key factor in its preference.

For Paramount Skydance, Wednesday’s rejection is the second formal rebuff in less than a month. The company has not publicly responded to the latest letter, and a spokesperson did not answer requests for comment. The bidder retains the option to raise its offer, modify terms or seek to replace WBD directors through a proxy campaign, although no such actions have been announced.

WBD shares closed Tuesday at $27.15 on the Nasdaq, below Paramount Skydance’s $30 cash proposal but above pre-rumor trading levels last summer. Paramount Global stock ended the day at $18.42 on the Nasdaq, while Netflix finished at $565.32 on the Nasdaq Composite. Market observers will watch the stocks closely as investors evaluate the likelihood of each outcome.

According to the timeline disclosed by WBD, the company expects to mail proxy materials detailing the Netflix transaction in the coming weeks. Shareholders of record as of a date yet to be specified will be entitled to vote. Unless Paramount Skydance improves its bid or another suitor emerges, the board’s recommendation points toward a final decision on the Netflix deal later this year.

Crédito da imagem: Getty Images