Warner Bros Discovery (WBD) is poised to formally advise its shareholders to reject a colossal $108bn (£81bn) hostile takeover attempt from rival media giant Paramount Global. This decisive move comes after a key financial supporter of Paramount's bid unexpectedly withdrew its backing.
Key Investor Exit Undermines Paramount's Offer
Affinity Partners, the investment firm founded by Jared Kushner, has pulled its support for Paramount's ambitious acquisition plan. A spokesperson for the firm told NBC News that "the dynamics of the investment have changed significantly," dealing a substantial blow to the financing package Paramount had assembled.
That package also included capital from sovereign wealth funds in Saudi Arabia, Qatar, and Abu Dhabi. Paramount escalated the situation into a full-blown hostile takeover last week by bypassing WBD's board and going directly to shareholders with an all-cash offer of $30 per share.
Netflix Deal Gains Favour with Warner Bros Board
In contrast, WBD's leadership is understood to be strongly in favour of a pre-existing $72bn agreement with streaming titan Netflix. That deal, signed two weeks ago, values WBD's film studios, TV production arm, and HBO Max services at $82.78bn, including debt.
Under its terms, Netflix would pay $23.25 in cash plus $4.50 in stock per share. The remaining linear TV networks owned by Discovery would be spun off into a separate entity. This transaction would hand Netflix control of iconic franchises like Harry Potter and Game of Thrones, significantly boosting its content arsenal in a fiercely competitive streaming market.
Regulatory Scrutiny and Board Arguments
Paramount has contended that its all-cash proposal offers greater certainty and a faster completion timeline, while suggesting the Netflix pact faces higher regulatory risk. A Paramount-WBD merger would combine major US broadcasters CBS and CNN under one roof, inevitably drawing scrutiny from antitrust regulators.
However, WBD's board is expected to counter that Paramount's financing is now less secure following Affinity's exit. They will likely highlight that Netflix's offer includes a $5.8bn break-up fee, which signals strong confidence in overcoming regulatory hurdles.
WBD shares have been trading slightly below Paramount's $30 offer price, indicating that investors may be anticipating an improved bid. Sources close to the board suggest it remains open to a revised proposal from Paramount, but only if funding concerns are fully resolved and the valuation is increased.
