Warner Bros. Discovery’s board unanimously rejects Paramount’s latest offer

• Warner Bros. Discovery has recommended shareholders not to take Paramount Skydance's tender offer.
• The board of directors argued Netflix's deal is safer and has fewer costs, even if the deal itself is for a smaller sum.

The board of directors at Warner Bros. Discovery has unanimously recommended shareholders to reject Paramount Skydance's tender offer.

The board argued it would not be in the interest of Warner Bros. Discovery or its shareholders to accept the offer, which fails to meet the "Superior Proposal" criteria in the context of the already-agreed deal with Netflix.

The board reiterated unanimous support for Netflix’s $82.7 billion deal, therefore.

The stronger offer

Warner Bros. put itself up for sale in the autumn of 2025 following interest from multiple potential buyers. The deal struck between Netflix and Warner Bros. Discovery was publicly confirmed on December 5th, but the bidding war continued with a $108.4bn all-cash offer from Paramount.

Now, Warner’s board of directors has explained to investors that even if Paramount has offered a greater sum, the deal would actually be inferior due to "significant costs, risks and uncertainties" compared to a Netflix sale.

Firstly, cancelling the Netflix deal would come with a $2.8bn termination fee and an additional $1.5bn fee for Warner failing to complete its debt exchange.

Conversely, the Netflix merger would see Warner shareholders receive $23.25 in cash and shares of Netflix common stock, which has the potential to create future value, it claimed.

"The board unanimously determined that the Paramount's latest offer remains inferior to our merger agreement with Netflix across multiple key areas," said Warner Bros. Discovery chair Samuel Di Piazza Jr.

"Paramount's offer continues to provide insufficient value, including terms such as an extraordinary amount of debt financing that create risks to close and lack of protections for our shareholders if a transaction is not completed.

"Our binding agreement with Netflix will offer superior value at greater levels of certainty, without the significant risks and costs Paramount's offer would impose on our shareholders."

No value attributed to games

Following the acquisition, Netflix co-CEO, president and director Gregory Peters discussed the fate of the games business during a conference presentation.

Peters said while Warner had done “great work in the game space, we actually didn’t attribute any value to that from the get-go because they’re relatively minor compared to the grand scheme of things". 

“Now we are super excited because some of those properties that they’ve built, Hogwarts is a great example of that, have been done quite well, and we think that we can incorporate that into what we’re offering,” stated Peters.

“They’ve got great studios and great folks working there. So we think that there’s definitely an opportunity there. But just to be clear, we haven’t built that into our deal model.”