According to Business Insider, Warner Bros. Discovery’s board has formally rejected David Ellison’s Paramount Skydance acquisition proposal for the eighth time. The rejection came in a letter to shareholders on Wednesday, despite Paramount revising its $108 billion bid to address financing concerns. The board cited “insufficient value” and a “lack of certainty” in Paramount’s ability to close the deal, which involves over $50 billion in new debt. Paramount’s all-cash offer of $30 per share competes with Netflix’s cash-and-stock bid of $27.75 per share for WBD’s studio and streaming assets. The WBD board highlighted a $2.8 billion breakup fee owed to Netflix if they walk away, among other costs totaling $4.7 billion. They unanimously recommend shareholders reject Paramount’s hostile tender offer and stick with the Netflix merger.
The Financing Fight
Here’s the thing: this isn’t just about the sticker price. The WBD board is essentially calling Paramount’s bluff on the money. They’re pointing out that Paramount Skydance is a company with a $14 billion market cap trying to swallow a deal requiring nearly $95 billion in financing. That’s wild. They’re framing it as the largest leveraged buyout in history, with a projected debt load of about 7 times next year’s estimated earnings. And they’re not wrong to be skeptical. The media landscape is brutal right now, and loading a combined entity with that much debt in a high-interest environment is a recipe for disaster. The board’s letter drips with doubt about whether Larry Ellison’s billions and a patchwork of lenders will actually come through in 12-18 months. I think they see the Netflix deal as clean, simple, and far less risky—Netflix has the cash flow and the balance sheet to make it happen without this financial circus.
A Hostile Path Forward
So what can David Ellison do now? The options are pretty stark. He can try to go directly to WBD shareholders and convince them his $30 cash is better than Netflix’s $27.75 plus stock. That’s a tough sell when the board is screaming about $4.7 billion in immediate costs that would effectively come out of that premium. Or, he can raise his bid. The article notes he even texted WBD CEO David Zaslav to say his offer wasn’t “best and final.” But how much higher can he go before the math becomes even more insane? The third option is to sue, alleging the board breached its duty by not considering his offer fairly. That’s a messy, long-shot play that often fails. It feels like Paramount is running out of leverage, and the board is betting that shareholders will prize certainty over a slightly higher number that might vanish.
The Netflix Safety Play
Look, the WBD board’s preference for Netflix isn’t just about fear. There’s a strategic logic they’re clinging to. The Netflix deal is basically an asset sale—they get cash and Netflix stock for the crown jewels (Warner Bros. studio, HBO Max). The messy, declining linear TV assets (CNN, TNT) get spun off into a separate company called Discovery Global. That lets them offload the hard part of the business. Paramount’s offer, by contrast, is for the whole ugly, complicated enchilada. For a board that’s been through the brutal merger that created WBD, the chance to surgically remove the studio and streaming while setting the linear business adrift probably looks like a gift. They’re choosing a controlled demolition over another chaotic mega-merger. Can you blame them?
What Happens Now?
Basically, we’re in a waiting game. Some insiders, like former Disney dealmaker Kevin Mayer, expect a renewed bidding war. Maybe Netflix throws in a few more bucks to shut this down. Maybe Ellison comes back with a knockout bid that makes the debt risk worth it for shareholders. But the tone of this letter is so dismissive, so final, that it feels like the board has dug its trenches. They’ve painted Paramount’s offer as reckless and are staking their reputation on the Netflix path. The real question is whether WBD shareholders are as tired of the drama as the board seems to be, or if that extra $2.25 per share in cash is too tempting to ignore. My bet? This hostile bid is on life support. After eight rejections, it’s starting to look desperate.
