The protracted bidding war for Warner Bros. Discovery (WBD) and its vast content library, including iconic franchises like "Harry Potter," "Game of Thrones," and DC Comics, continues to unfold. The studio's board has once again unanimously rejected a revised $108.4 billion acquisition bid from Paramount Skydance, labeling the proposal a "leveraged buyout" that would saddle the company with an unsustainable $87 billion in debt. This decision reinforces WBD's preference for an earlier, less debt-intensive deal with Netflix.
In a letter to shareholders, WBD urged them to reject Paramount's offer, citing the "extraordinary amount" of debt required as a significant risk factor for the deal's collapse. Instead, WBD recommended shareholders vote in favor of its previously announced $82.7 billion deal with Netflix for its film and TV studio assets. Paramount had initially approached WBD's shareholders directly in early December with an all-cash, $30-per-share offer after WBD's board had already opted for Netflix. WBD swiftly rejected this initial hostile bid, calling it "illusory" and questioning Paramount's financial capacity, reiterating its recommendation for Netflix's cash-and-share deal.
Undeterred, Paramount returned with a revised proposal, reportedly backed by a $40 billion guarantee from Oracle co-founder Larry Ellison, the billionaire father of Paramount CEO David Ellison. Paramount indicated it would raise an additional $54 billion in debt to finance the acquisition.
However, WBD remains unconvinced by Paramount's revised terms. In a public statement, the company articulated its profound concerns:
"[Paramount] is a company with a $14 billion market capitalization attempting an acquisition requiring $94.65 billion of debt and equity financing, nearly seven times its total market capitalization [...] This aggressive transaction structure poses materially more risk for WBD and its shareholders when compared to the conventional structure of the Netflix merger."
WBD further questioned Paramount's operational viability post-acquisition, arguing that incurring such substantial debt would exacerbate Paramount's existing "junk" credit rating. The studio was particularly troubled by Paramount's negative free cash flow, which would be worsened by any acquisition.
In stark contrast, WBD highlighted the financial stability of its preferred partner:
"In contrast, Netflix is a company with a market capitalization of approximately $400 billion, an investment grade balance sheet, an A/A3 credit rating and estimated free cash flow of more than $12 billion for 2026."
Netflix, for its part, welcomed WBD's decision, stating that a merger would "bring together highly complementary strengths and a shared passion for storytelling."
