Warner Bros likely to reject $108.4 billion Paramount bid

Warner Bros Discovery’s board could announce a decision as soon as Wednesday on Paramount Skydance’s $108.4 billion takeover bid. The board is expected to advise shareholders to vote against the offer.

Recommitting to Netflix’s offer would mark the latest twist in the race for these assets. They include Warner Bros’ film and TV studio and its vast library. The collection ranges from classics like “Casablanca” and “Citizen Kane” to modern favourites such as “Harry Potter,” “Friends,” HBO, and the HBO Max streaming service.

The winner will gain a major advantage in the streaming wars by securing a deep content library that has long been an acquisition target.

The bidding war: Netflix vs. Paramount

Earlier this month, Netflix emerged on top with a $27 cash-and-stock bid for Warner Bros’ non-cable assets.

Paramount CEO David Ellison later went directly to Warner Bros’ shareholders with a $30-a-share, all-cash offer for the entire company.

In regulatory filings, Paramount has argued its bid is stronger than Netflix’s offer and likely to win approval more easily. The offer is financed with $41 billion in new equity from the Ellison family and RedBird Capital. It also includes $54 billion in debt commitments from Bank of America, Citi, and Apollo.

Jared Kushner’s Affinity Partners, one of Paramount’s financing partners, dropped out of the deal. The firm cited the involvement of “two strong competitors.”

Regulatory filings also show the offer is backed by external investors. These include the Saudi Public Investment Fund and the Qatar Investment Authority, raising questions about the certainty of financing.

Concerns over financing and flexibility

The equity is backstopped by a trust that manages the wealth of his father, software billionaire Larry Ellison. Because the trust is revocable, assets can be withdrawn at any time.

Earlier the same day, President Trump criticised Paramount on social media, saying he had been treated “far worse” by the company’s CBS division since the Ellison family took control earlier this year. The Ellisons have touted their close relationship with the president.

Warner Bros.’ board is also concerned about the company’s ability to operate during the year or more it could take to secure regulatory approval for a sale. Paramount’s proposal isn’t offering enough flexibility to run its business or manage its balance sheet, according to sources.

Paramount said in a filing last week that it had addressed Warner Bros. concerns.These included flexibility in refinancing debt and a $5 billion breakup fee, which the Ellison family would backstop.

Paramount also adjusted other terms of its bid in response to Warner Bros.’ requests. For example, about $1 billion in financing from China’s Tencent Holdings Ltd. was withdrawn. The move followed concerns that the funding could raise national security issues with US regulators.

Warner Bros deal with Netflix

Warner Bros. agreed this month to sell its studios, streaming business and HBO to Netflix for $27.75 a share, or about $83 billion including debt. Separately, the company plans to spin off cable networks, including CNN and TNT to shareholders before the Netflix deal closes.

Warner Bros. Discovery’s board has publicly called Paramount’s offer “inadequate,” citing significant risks compared with the Netflix deal. The board emphasised that Netflix provides a more certain and stable transaction for shareholders.

Paramount, which owns MTV and the Paramount+ streaming service, has offered to acquire all of Warner Bros. for $30 a share, or over $108 billion, including debt.

Paramount’s hostile tender offer

Three days after Netflix and Warner Bros. announced their deal, Paramount took its offer directly to shareholders. It launched a public tender offer for Warner Bros. shares.

Paramount has indicated that its $30-a-share offer for Warner Bros. isn’t its “best and final,” suggesting there is room to increase its bid. Warner Bros. Shares closed at $28.90 in New York, suggesting some investors anticipate a higher price.

Warner Bros.’ agreement with Netflix bars it from soliciting proposals from other bidders, but it may consider any proposals that others submit. If a superior offer arises, Warner Bros. must give Netflix the opportunity to match the better offer in order to keep their existing deal.

Political considerations could also influence the outcome: President Trump has indicated he plans to weigh in on the regulatory review, particularly regarding CNN — included in Paramount’s bid but excluded from Netflix’s acquisition.

Paramount’s bid would acquire the entire Warner Bros. Discovery company, including CNN — part of its cable network portfolio not included in the Netflix transaction.

The financing behind Paramount’s offer has drawn scrutiny: in addition to the Ellison family and RedBird Capital, outside investors listed included Affinity Partners, the Saudi Public Investment Fund, and the Qatar Investment Authority. Affinity Partners has since stepped back from the deal.

Political and regulatory considerations

President Donald Trump has indicated he plans to be involved in the regulatory review of any deal. He has specifically mentioned CNN as a factor, a network included in Paramount’s bid but excluded from Netflix’s agreement.

Analysts say that political and regulatory oversight could play a decisive role, particularly given the high-profile nature of CNN and Warner Bros.’ content library, and the potential for antitrust review of Netflix’s growing streaming market share.

What’s at stake for the streaming industry

The result of the Warner Bros. Discovery takeover battle could change the global streaming landscape at a very important time for the industry. After years of heavy investment, streaming platforms are under pressure to prioritise profitability. This makes ownership of established franchises and large content libraries increasingly valuable.

For Netflix, securing Warner Bros.’ studio operations and HBO would make Netflix the leader in streaming. It would give it control over one of Hollywood’s most prestigious production engines and a library of films, premium television and unscripted content. Analysts say the merger would reduce Netflix’s reliance on third-party licensing while strengthening its ability to produce exclusive, high-budget programming on a large scale.

Paramount’s approach reflects a different strategic bet. The company would be wagering on the long-term value of diversified media assets by looking to acquire the entire Warner Bros. Discovery business, which includes cable networks like CNN.

This is even though traditional television audiences continue to decline. Supporters argue that scale across streaming, film and linear television could improve negotiating power with advertisers and distributors while giving them greater flexibility as viewing habits change.

Investors and regulators are watching closely, viewing the contest as a test case for how consolidation in the streaming era will be judged, and how much market power regulators will allow a single platform to accumulate.

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