Warner nixes Paramount’s bid (again), citing proposed debt load

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Warner Bros. Discovery’s board turned down the latest offer from Paramount to buy the company, marking another setback for Paramount’s acquisition attempt.

The board explained that Paramount would struggle to afford its planned $108 billion acquisition due to a very large amount of existing debt.

Warner’s board members rejected the latest takeover attempt by Paramount this week. They all agreed that the offer, which was supported by tech billionaire Larry Ellison and investors from the Middle East, wouldn’t benefit the company or its owners.

This is the sixth time Warner Bros. Discovery’s board has rejected a buyout offer from Paramount, ever since Paramount CEO David Ellison first approached them with the idea in September.

Warner board members detailed in a letter to investors that Paramount Skydance is currently valued at $14 billion. However, their proposed acquisition would require $94.65 billion in funding – almost seven times the company’s current value.

Warner explained that Paramount’s offer resembled a leveraged buyout, and if completed, it would be the biggest of its kind ever seen in the United States.

The Warner board stated that the proposed PSKY deal is riskier than the Netflix merger, mainly due to the significant debt involved and other deal terms. They continue to recommend that shareholders favor the sale of most of the company to Netflix as the better option.

Hollywood Inc.

Netflix is reportedly interested in acquiring Warner Bros. and HBO, but Paramount Global is also making a competing offer, even an unwelcome one. Here’s a look at how things have unfolded so far.

This development forces Paramount to either secure more funding or increase its offer to over $30 per share.

But if Paramount were to increase its offer without also contributing more of its own equity, it would simply increase the amount of debt needed to acquire HBO, CNN, TBS, Animal Planet, and Warner Bros. film and television studios in Burbank.

Paramount representatives were not immediately available for comment.

This recent shakeup follows last month’s unanimous decision by Warner Bros. Discovery’s board to accept a $72 billion offer from Netflix. The board reiterated its support for the deal on Wednesday, which would give Netflix ownership of iconic entertainment brands like HBO, DC Comics, and the Warner Bros. studio. Netflix is offering $27.75 per share.

Netflix leaders Ted Sarandos and Greg Peters announced Wednesday that a new partnership will bring audiences more of their favorite movies and shows, both in cinemas and at home. They also stated it will create more opportunities for filmmakers and help the entertainment industry grow and stay competitive.

Following Warner’s agreement with Netflix on December 4th, Paramount responded by directly appealing to Warner’s investors.

Paramount is offering to buy shares from Warner investors, and has given them until January 21st to accept the offer.

Warner again recommended its shareholders disregard Paramount’s overtures.

Hollywood Inc.

Okay, so things are getting really interesting in the fight for Warner Bros. Discovery. Paramount just made a big move – they’re saying Larry Ellison, the Oracle guy, is willing to personally help fund their bid. It’s like they’re throwing down the gauntlet and saying, ‘We’re serious about this,’ in this already pretty heated auction.

The sale of Warner Bros. is happening as many entertainment companies are cutting back, and it might cause even more job losses and restructuring in the industry.

After taking control of Paramount in August, the Ellison family immediately began making significant investments, most notably a $7.7 billion deal to broadcast UFC fights. At the same time, the company, which also owns the CBS network, reduced its workforce by over 2,000 employees.

Warner Bros. Discovery came into being in 2022 when AT&T sold WarnerMedia to Discovery, a company specializing in cable programming.

To pay for its $43 billion purchase of WarnerMedia, Discovery borrowed a lot of money. Over the next three years, company leaders, including CEO David Zaslav, focused on reducing debt by cutting jobs and canceling projects.

According to Warner Bros. Discovery, Paramount would have to borrow over $60 billion to acquire the entire company.

Hollywood Inc.

The entertainment industry has been through a lot recently, with challenges from the COVID-19 pandemic and the writers’ and actors’ strikes. A potential combination of two big companies could lead to further layoffs, according to industry analysts.

Warner believes splitting off its cable channels, like CNN, into a new company called Discovery Global this year will benefit shareholders. This is because Netflix only plans to purchase Warner Bros. film and TV studios, HBO, and the HBO Max streaming service, making the separation necessary for the deal to proceed.

The recent launch of Versant, which includes channels like CNBC and MS NOW previously owned by Comcast, has made predicting future performance more difficult. In its first two days on the stock market, Versant’s share price dropped by 19%.

Warner’s directors rejected three offers from Paramount before deciding to consider bids from other interested companies in late October.

The board turned down Paramount’s offer of $30 per share, made entirely in cash on December 4th. They then rejected Paramount’s first unsolicited attempt to buy the company two weeks later.

Warner initially expressed concern about how much money Larry Ellison would personally contribute to the offer for Paramount. Shortly after, Ellison committed to personally guarantee $40.4 billion in funding for Paramount.

Hollywood Inc.

Netflix’s deal to acquire Warner Bros. is a game-changer for Hollywood and the competition between streaming services. It also brings up concerns about fair competition and combines popular franchises like DC Comics and ‘Stranger Things’ all in one place.

David Ellison argues that Warner Bros. Discovery didn’t give his company’s offer proper consideration, and he believes his deal would have been more profitable than the one Warner is pursuing with Netflix.

According to a letter released Wednesday, Paramount and Warner Bros. Discovery spent several months in detailed discussions, involving teams from both companies – including lawyers, financial institutions, and consultants.

They understand why the Board believes the deal with Netflix is better than their proposal.

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2026-01-07 16:31