The bidding war for Warner Bros. Discovery and its extensive library of hit TV shows and films like Harry Potter, Game of Thrones, and the DC Comics titles continues to drag on. The studio recently stated that its board unanimously rejected a revised $108.4 billion bid from Paramount Skydance, calling the proposal a leveraged buyout that would saddle the company with approximately $87 billion in debt.
In a letter to shareholders, Warner Bros. Discovery urged them to reject this offer. The company argued that the extraordinary amount of debt Paramount would need to raise heightens the risk of the deal falling through. Instead, the board recommended shareholders vote in favor of its earlier agreement, an $82.7 billion deal with Netflix for its film and TV studio assets.
Paramount, which was previously rumored to be interested in acquiring Warner Bros. Discovery, went directly to shareholders with an all-cash offer in early December after the board decided to sell to Netflix. Warner Bros. Discovery rejected that initial bid as well, calling it illusory and questioning Paramount’s ability to finance it, while reaffirming its support for the Netflix cash-and-share deal.
Paramount then returned with a revised proposal, including a $40 billion guarantee from Oracle co-founder Larry Ellison, the father of Paramount Skydance CEO David Ellison. The plan also involved raising $54 billion in debt to fund the acquisition.
Warner Bros. Discovery remains unconvinced. The company pointed out that Paramount has a market capitalization of only about $14 billion but is attempting an acquisition requiring nearly $95 billion in financing, which is nearly seven times its total market value. Warner Bros. stated this aggressive transaction structure poses materially more risk compared to the conventional structure of the Netflix merger.
The studio also called into question Paramount’s ability to function effectively if the deal proceeds, arguing that raising such a massive debt load would further worsen Paramount’s current junk credit rating. Warner Bros. expressed particular concern about Paramount’s negative free cash flow, which would be exacerbated by the acquisition.
In contrast, the company highlighted that Netflix has a market capitalization of approximately $400 billion, an investment-grade balance sheet, a strong credit rating, and significant projected free cash flow. Netflix welcomed Warner Bros. Discovery’s decision, stating that after the merger the companies would bring together highly complementary strengths and a shared passion for storytelling.