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Title: Warner Bros. Discovery Thwarts Paramount’s Ambitious Bid, Sticking with Netflix Deal
The ongoing tussle for Warner Bros. Discovery (WBD) and its treasure trove of beloved properties—from the magical realm of “Harry Potter” to the epic saga of “Game of Thrones”—has taken yet another turn.
On Wednesday, WBD’s board made it clear that they had decisively dismissed Paramount Skydance’s revamped proposal, which weighed in at a staggering $108.4 billion. The studio described the offer as a “leveraged buyout,” foreseeing a potential burden of $87 billion in debt should the deal go through.
In a message to its shareholders, WBD was unequivocal in its rejection of the Paramount bid, warning that the enormous debt required raises the stakes for the entire deal. Instead, WBD encouraged investors to back its earlier, more favorable agreement with Netflix, valued at $82.7 billion, for its prestigious film and television assets.
This latest development follows Paramount’s attempts to capture WBD’s attention, with initial rumors hinting at a more strategic interest in acquiring the studio. After WBD chose to partner with Netflix, Paramount circumvented the board by approaching shareholders directly with a cash offer of $30 per share in early December. However, WBD shot down this bid, deeming it “illusory” and expressing doubts about Paramount’s financial backing, advocating instead for Netflix’s offer.
Undeterred, Paramount returned to the table armed with a $40 billion endorsement from Larry Ellison, Oracle’s co-founder and father of Paramount’s CEO, alongside plans to raise $54 billion in debt financing.
WBD, however, remains skeptical. In a detailed statement, they highlighted the imbalance of the acquisition’s structure, noting that it would require nearly seven times Paramount’s market cap of $14 billion. They stressed that such a risky maneuver posed significant danger for WBD and its shareholders compared to the more traditional Netflix arrangement.
Furthermore, WBD raised concerns regarding Paramount’s financial stability, particularly in light of their negative cash flow. They asserted that a hefty acquisition would only worsen Paramount’s current “junk” credit rating. In contrast, they pointed to Netflix, which boasts a robust market capitalization of around $400 billion, an impressive credit rating, and anticipated free cash flow exceeding $12 billion for 2026.
Netflix has openly endorsed WBD’s decision, emphasizing that the merger will blend their respective strengths and fuel a mutual passion for storytelling.
This escalating bidding war highlights the immense stakes involved in the rapidly evolving landscape of the entertainment industry, where the battle for iconic content is more heated than ever.
