Warner Bros. Discovery Rejects $108B Paramount Bid Again

The board of Warner Bros. Discovery (WBD) has formally rejected a revised $108.4 billion acquisition proposal from Paramount Skydance. Directors unanimously advised shareholders to vote against the offer, labeling the move a high-risk “leveraged buyout” that would burden the combined entity with $87 billion in debt.

Debt Concerns and Financial Risks

In a direct communication to its investors, WBD highlighted that the financial structure proposed by Paramount is precarious. The studio warned that the sheer volume of debt required to finalize the deal—roughly $94.65 billion in combined debt and equity financing—could jeopardize the stability of the company. WBD emphasized that this structure is significantly more aggressive than the terms outlined in their existing $82.7 billion merger agreement with Netflix.

Beyond the immediate leverage, WBD expressed skepticism regarding Paramount’s long-term operational health. The studio noted that the massive debt load would likely damage Paramount’s already shaky “junk” credit rating. Furthermore, concerns were raised regarding Paramount’s negative free cash flow, which WBD argues would only worsen under the weight of such a massive acquisition.

The Comparison to the Netflix Deal

The board is pushing for the completion of its deal with Netflix, positioning it as a far more secure alternative. WBD highlighted the stark contrast between the two suitors:

• Netflix: Boasts a market capitalization of approximately $400 billion, an investment-grade balance sheet, an A/A3 credit rating, and a projected free cash flow exceeding $12 billion for 2026.
• Paramount: Currently holds a market capitalization of $14 billion, making the scale of its $108.4 billion bid nearly seven times its total market value.

A History of Rejected Offers

This rejection follows a series of failed attempts by Paramount to acquire WBD. When the Netflix deal was first announced, Paramount—which had been rumored as a potential buyer—approached WBD shareholders directly in early December with an all-cash offer of $30 per share. At the time, the WBD board dismissed the bid as “illusory,” questioning Paramount’s liquidity.

Paramount later returned with a $40 billion guarantee provided by Oracle co-founder Larry Ellison, father of Paramount CEO David Ellison, alongside plans to raise $54 billion in debt. Despite these assurances, the WBD board remains unconvinced that the proposal is viable.

In a statement regarding the latest decision, WBD reiterated its commitment to the Netflix path. Netflix has formally welcomed the board’s rejection of the rival bid, stating that the merger will unite “highly complementary strengths” and a shared focus on content production for massive franchises like “Harry Potter,” “Game of Thrones,” and DC Comics.