Warner Bros. Discovery has announced that its board of directors unanimously recommends shareholders reject the latest acquisition offer from Paramount Skydance, describing the proposal as both “insufficient” and “risky.” The board determined that the revised offer, submitted on December 22, does not match the value or security of the company’s existing agreement with Netflix.

In December, Netflix reached a deal with Warner Bros. Discovery to acquire key assets, including HBO and the Warner Bros. film and television studios, for $82.7 billion. The board cited several reasons for preferring the Netflix agreement, including concerns over the “extraordinary amount of debt financing” involved in Paramount’s proposal, which they believe would introduce significant risks and lack adequate protections for shareholders if the transaction fails to close.

“The Board unanimously determined that Paramount’s latest offer remains inferior to our merger agreement with Netflix across multiple key areas,” said Warner Bros. Discovery chair Samuel A. 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.”

Paramount Skydance had previously made a hostile takeover bid to acquire all outstanding shares of Warner Bros. Discovery for $30 per share in cash, totaling approximately $108.4 billion. After the board rejected this offer, Paramount submitted a revised proposal on December 22.

Industry analysts have noted that for Paramount to successfully outbid Netflix, it would need to significantly increase its offer and adjust the structure of its bid. This would involve shifting from debt-heavy financing to a greater proportion of cash, and ensuring that funding sources do not introduce regulatory complications. Analysts also suggested that a higher cash investment from the Ellison family and their partners would be necessary for Paramount to remain competitive in the bidding process.

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