Warner Bros Set to Reject Paramount's Takeover Bid Despite Ellison's Guarantee
Warner Bros. Discovery is set to reject Paramount Skydance Corp.'s amended takeover bid next week, despite billionaire Larry Ellison's personal guarantee of $40.40 billion in equity financing. The board remains concerned about the unchanged $30.00 per share offer, lack of debt management control, and absence of Netflix breakup fee coverage, while shareholders expect improved financial terms.
*this image is generated using AI for illustrative purposes only.
Warner Bros. Discovery Inc. is preparing to reject another takeover bid from Paramount Skydance Corp., despite recent amendments to the proposal including a personal guarantee from billionaire Larry Ellison. The Warner Bros. board, which has not made a final determination, is scheduled to meet next week to address the revised offer.
Board Concerns Over Unchanged Financial Terms
The primary concern among board members centers on Paramount's unchanged financial offer. According to people familiar with the matter, the media conglomerate maintains its position that Paramount's proposal remains inferior to the accepted deal with Netflix Inc.
| Deal Comparison: | Details |
|---|---|
| Paramount Offer: | $30.00 per share cash bid |
| Netflix Deal: | Studio and streaming businesses only |
| Paramount Bid Date: | December 8 (three days after Netflix acceptance) |
| Netflix Market Value: | Over $400 billion |
| Ellison Guarantee: | $40.40 billion in equity financing |
Ellison Family's Media Empire Strategy
Paramount is controlled by billionaire Larry Ellison and his son David, a movie producer who is assembling a media empire. The Ellisons gained control of Paramount in August and have since submitted multiple bids for Warner Bros., seeking to add another original Hollywood studio to their portfolio and increase their streaming scale.
Paramount has amended its offer twice since the initial December bid. The most recent modification includes an assurance from Larry Ellison that he would personally guarantee $40.40 billion in equity financing and other commitments, demonstrating the family's commitment to the acquisition.
Strategic and Financial Obstacles
Warner Bros. board members have identified several concerns beyond the financial terms that remain unresolved:
| Key Concerns: | Details |
|---|---|
| Debt Management: | No approval rights without Ellisons' consent |
| Breakup Fee: | No guarantee to cover Netflix breakup fee |
| Job Security: | Significant job cuts planned in restructuring |
| Financial Stability: | Heavy debt burden post-acquisition |
Market Dynamics and Shareholder Expectations
Warner Bros. has argued in public filings that the Netflix offer remains superior for multiple reasons. The company emphasizes Netflix's position as Hollywood's most valuable company with a market value exceeding $400.00 billion, compared to Paramount's more constrained financial position.
Several shareholders have indicated expectations that Paramount will need to increase its financial offer to gain board approval. The Warner Bros. board continues to wait for improved financial terms before reconsidering the proposal, with investors anticipating a larger financial offer from Paramount.
Corporate Assets at Stake
The takeover battle involves significant media assets on both sides. Paramount owns its namesake studio and MTV, while Warner Bros. controls HBO and CNN. Netflix's current deal focuses specifically on Warner Bros.' studio and streaming operations, representing a more targeted acquisition approach compared to Paramount's comprehensive takeover proposal.
19
