Warner Bros Rejects Paramount’s $30 Bid, Stays Committed to Netflix Deal

Warner Bros Discovery on Tuesday rejected Paramount Skydance’s revised $30-per-share hostile takeover offer. However, the company gave Paramount seven days to submit what it described as a “best and final” proposal that could potentially surpass its existing agreement with Netflix.

The current Netflix deal involves the sale of Warner Bros’ studio and streaming assets, including HBO Max and major franchises such as Harry Potter.

Although Paramount informally floated a higher $31-per-share valuation, Warner Bros indicated it still favors the Netflix merger. The board’s response suggests that the likelihood of switching suitors remains low.

Warner Bros shares rose 3.4% to $28.93, while Paramount gained nearly 5%. Netflix shares were largely unchanged in afternoon trading.

Paramount Has Until February 23 to Improve Offer

Paramount now has until February 23 to submit an improved bid. Under the merger agreement, Netflix retains the right to match any competing offer.

In a letter to Paramount’s board, Warner Bros Chairman Samuel DiPiazza Jr. and CEO David Zaslav stated that the revised proposal is not “reasonably likely” to result in a superior transaction compared to the Netflix merger.

They reaffirmed their commitment to the Netflix deal.

High-Stakes Battle for Warner Bros’ Content Empire

The takeover battle highlights the shifting dynamics of the entertainment industry. Warner Bros owns a vast content library that includes iconic films like Casablanca and Citizen Kane, as well as globally popular franchises such as Friends and Batman.

Paramount has continued to push back, calling the board’s actions “unusual.” The company said it will proceed with its tender offer, oppose the Netflix merger, and nominate directors at Warner Bros’ upcoming annual meeting.

Paramount’s total bid for the entire company values Warner Bros at approximately $108.4 billion. In contrast, Netflix is offering $27.75 per share, or roughly $82.7 billion, for its studio and streaming operations only.

Shareholder Vote on Netflix Deal Set for March 20

Warner Bros plans to move forward with a shareholder vote on the Netflix merger on March 20.

If approved, the transaction would follow a spin-off of Warner Bros’ Discovery Global cable assets, including CNN, TLC, Food Network, and HGTV, into a separate publicly traded company.

Warner Bros estimates that Discovery Global could be valued between $1.33 and $6.86 per share.

Activist Investors and Financing Concerns Add Pressure

Paramount’s revised offer earlier included a $40 billion equity guarantee backed by Larry Ellison, father of Paramount CEO David Ellison. Despite this, the proposal was rejected in early January.

Warner Bros is also facing pressure from activist investor Ancora Holdings, which has built a significant stake and plans to oppose the Netflix transaction.

Paramount argues that it has addressed the board’s previous concerns. However, Warner Bros maintains that key financing risks remain unresolved. These include uncertainty around debt funding, a potential $1.5 billion junior lien fee, and whether additional equity would be required if financing conditions deteriorate.

Under the merger agreement, Warner Bros may only negotiate with a rival bidder if the board believes the offer could be superior. To engage with Paramount, it secured a special waiver from Netflix.

Netflix stated that its transaction offers greater certainty and value to shareholders. The company also acknowledged that the ongoing bidding dispute has created distractions for investors and the broader media industry.

Regulatory Scrutiny and Industry Impact

Any final deal is expected to face regulatory review, particularly over concerns about consumer pricing and competition within the entertainment sector.

Both Paramount and Netflix confirmed they are engaging with regulators globally, including the U.S. Department of Justice.

As the February deadline approaches, market attention remains focused on whether Paramount will submit a significantly improved offer or whether Warner Bros will proceed with the Netflix merger as planned.