In a dramatic escalation of a corporate power struggle, Warner Bros Discovery (WBD) has formally advised its shareholders to reject a colossal $108.4 billion (£80bn) hostile takeover bid from Paramount Skydance. The media giant's board has labelled the offer as "inadequate" and accused Paramount of consistently misleading investors about the proposal's financial backing.
The Battle for Control and the Ellison Guarantee
The bid, which seeks to acquire the entirety of WBD—including CNN, Cartoon Network, and the Discovery Channel—is a direct challenge to a pre-existing $82.7 billion deal WBD has with Netflix. To counter WBD's criticism about financing, Paramount recently secured a personal guarantee worth over $40 billion from Oracle co-founder Larry Ellison, a member of the controlling Ellison family.
Paramount stated this "full backstop" was intended to address WBD's concerns about financial flexibility. However, in a letter to shareholders, WBD's board remained unconvinced, highlighting "significant" risks and costs. The company pointed out that even with the Ellison guarantee, the Paramount offer would constitute the "largest leveraged buyout (LBO) in history," a risky financial structure.
Superior Proposal or Regulatory Hurdle?
WBD's board continues to unanimously support its alternative agreement with Netflix, which involves the sale of its storied movie studios, the HBO cable network, and the HBO Max streaming service. Walking away from this Netflix pact would trigger a $2.8 billion breakup fee. In a competitive move, Paramount Skydance increased its own proposed termination fee to $5.8 billion to match Netflix's terms.
"Your board unanimously determined that the amended offer remains inadequate particularly given the insufficient value it would provide, the lack of certainty in Paramount Skydance’s ability to complete the offer, and the risks and costs borne by WBD shareholders," the company stated.
Industry Scrutiny and Executive Backing
Both major media deals are anticipated to face intense regulatory scrutiny in the United States, with prominent lawmakers and industry figures already expressing concern. Former President Donald Trump has indicated an intention to be involved in the process.
Meanwhile, Netflix's co-CEOs, Ted Sarandos and Greg Peters, have thrown their weight behind the merger with WBD. They described it as the "superior proposal" that would deliver the greatest value to stockholders and consumers alike, promising to combine complementary strengths in storytelling.
The corporate standoff leaves shareholders with a stark choice: accept the hostile bid for the whole company or back the board's preferred path of a partial asset sale to Netflix, setting the stage for one of the most significant media battles in recent years.
