Warner Bros directors argue the rival tender offer adds avoidable financing and break-fee exposure, while disputing claims that the Netflix deal faces materially higher regulatory risk.
Warner Bros. Discovery (WBD) has formally moved to shut down Paramount Skydance’s hostile takeover attempt, with its board unanimously recommending shareholders reject the rival tender offer and instead back the company’s agreed merger with Netflix.
In a statement issued on December 16, alongside a Schedule 14D-9 filing with the US Securities and Exchange Commission (SEC), the WBD board said Paramount Skydance’s December 8 offer failed to meet the threshold of a “Superior Proposal” under the terms of its merger agreement with Netflix, citing concerns around valuation, financing credibility and deal certainty.
The intervention marks the most decisive escalation yet in a takeover contest which has drawn in some of the biggest names in global media and has been framed as a strategic battle over streaming scale, sports rights and long-term balance sheet resilience.
A turning point in the takeover saga
Paramount Skydance’s bid, valued at $108.4bn and pitched directly to shareholders, was positioned as a higher-value alternative to Netflix’s agreed acquisition of WBD’s film, television and streaming studios. Paramount argued its all-cash structure offered greater certainty and a cleaner break for investors, while also preserving WBD as a fully integrated media company.
However, the WBD board has now publicly rejected that framing.
In a letter sent to shareholders, directors said they had conducted a further review of the Paramount Skydance offer and concluded it remained inferior to the Netflix transaction, despite being largely unchanged from proposals previously dismissed during a strategic review process launched in October.
“The PSKY offer provides inadequate value and imposes numerous, significant risks and costs on WBD,” the letter said. “PSKY has consistently misled WBD shareholders that its proposed transaction has a “full backstop” from the Ellison family. It does not, and never has.”
The board reiterated its support for the Netflix deal and urged shareholders not to tender their shares into Paramount Skydance’s offer.
Certainty over headline value
Central to the board’s argument is a distinction between headline valuation and execution risk. While Paramount Skydance has repeatedly pointed to the size of its bid, WBD’s directors stressed that the Netflix merger offers what they described as “superior, more certain value” underpinned by binding commitments.
Under the agreed transaction, WBD shareholders are set to receive a combination of cash and Netflix equity, alongside future participation in Discovery Global, the new entity that will house assets not being acquired by Netflix. The board positioned this structure as offering both immediate value and longer-term upside, without reliance on third-party equity backstops.
By contrast, directors characterised Paramount Skydance’s tender offer as non-binding and capable of being amended or withdrawn at any point prior to completion. They also warned that the offer could not realistically be completed by its current expiration date due to the need for global regulatory approvals, which Paramount itself has suggested could take 12 to 18 months.
Financing and governance concerns
The sharpest criticism was reserved for the financing structure underpinning Paramount Skydance’s bid. The WBD board challenged repeated claims that the offer was fully backstopped by the Ellison family, saying no such unconditional equity commitment had been provided.
Instead, directors highlighted Paramount Skydance’s reliance on an opaque, revocable trust arrangement, arguing that it offered limited protection for shareholders if the deal failed to close. They also pointed to provisions that would cap the trust’s liability for damages at a fraction of the total transaction value, even in the event of a willful breach.
Alongside these governance concerns, the board raised questions about leverage and credit risk. It said the proposed acquisition would leave Paramount Skydance with a highly leveraged balance sheet and minimal free cash flow generation prior to synergies, exposing the combined business to heightened vulnerability if trading conditions deteriorated between signing and closing.
The board also noted that accepting the Paramount Skydance offer would trigger significant additional costs for WBD shareholders, including a $2.8bn termination fee payable to Netflix and roughly $1.5bn in financing costs tied to debt arrangements that would be disrupted by the tender offer.
Regulatory risk: no meaningful difference
Paramount Skydance has previously argued that Netflix’s acquisition of WBD assets would face greater antitrust scrutiny, particularly in the subscription video-on-demand market. The WBD board rejected that assessment, stating it saw no material difference in regulatory risk between the two transactions.
According to the board, both deals are capable of securing the necessary US and international approvals. It also highlighted that Netflix has agreed to a significantly higher regulatory termination fee than Paramount Skydance, a signal, it said, of confidence in the approval process.
While the board’s recommendation is framed squarely around shareholder value, the outcome has wider implications for the sports and media landscape. Control of WBD’s sports assets, including TNT Sports in the US and UK and a broad portfolio of premium rights, has been a central undercurrent in the takeover battle.
A Netflix-led deal would accelerate the integration of live sport into global streaming platforms, while Paramount Skydance’s proposal pointed towards a more traditional consolidation of linear and streaming sports rights under one corporate roof. The board’s stance suggests WBD is prioritising platform scale, capital strength and execution certainty over the immediate aggregation of sports portfolios.
