The Warner Bros. Discovery (WBD) board has again recommended that the studio’s shareholders reject a hostile takeover offer from Paramount Skydance.
In a letter to shareholders published on Wednesday (Jan 7), the WBD board said Paramount’s revised $108.4bn hostile bid – announced on December 22 – amounted to a risky leveraged buyout that investors should reject.
The board said the Paramount bid is “inferior” to the previously announced deal with Netflix to buy WBD’s studio and streaming business for $82.7bn.
The WBD board stressed that Paramount's offer depends on "an extraordinary amount of debt financing" that heightens the risk of closing.
It described Paramount as a company with a $14bn market capitalisation attempting an acquisition requiring $94.65bn of debt and equity financing, nearly seven times its total market capitalisation.
“The transaction Paramount Skydance is proposing is in effect a leveraged buyout (LBO). In fact, it would be the largest LBO in history with $87bn of total pro forma gross debt.”
The board went on to reaffirm its commitment Netflix’s deal for WBD’s film and television studio and streaming assets.
“Netflix is a company with a market capitalisation of approximately $400bn, an investment grade balance sheet, an A/A3 credit rating and estimated free cash flow of more than $12bn for 2026. The merger agreement with Netflix also provides WBD with more flexibility to operate in a normal course until closing. Given these factors, the Board determined that the Netflix merger remains superior to Paramount Skydance’s amended offer.”
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