Warner Bros Urges Shareholders to Reject Paramounts Latest Hostile Bid in Favour of Netflix Offer

The board of Warner Bros Discovery has advised shareholders to turn down a £108 billion hostile bid from Paramount Skydance, describing the approach as inferior compared to terms recently agreed with Netflix. In a letter addressed to investors, the studio highlighted concerns with the Paramount proposal, which marks the seventh such approach since September, criticising its dependence on the Ellison family trust rather than any binding personal guarantees from Larry Ellison, co founder of Oracle.

Warner Bros made it clear that the Paramount offer, led by David Ellison, was not underpinned by a robust guarantee. The trust in question, holding Oracle shares reportedly valued at £257 billion as of December, was described by Warner as an “opaque” and revocable instrument. This raised questions about the reliability of the financing, as the assets and liabilities of the trust remain undisclosed and subject to change, thus exposing shareholders to unnecessary risk.

The Paramount offer promised Warner investors £30 per share in cash for all company assets, including its cable television operations. Of the £40.7 billion equity element, £11.8 billion would have come from the Ellison family, while an additional £24 billion was sourced from the sovereign wealth funds of Saudi Arabia, Qatar, and Abu Dhabi. Further financial commitments totalled £54 billion, secured via major banking institutions. However, the planned support from Affinity Partners, an investment firm founded by Jared Kushner, was withdrawn, casting more uncertainty on the funding structure.

The stakes are considerable for Warner as they have already accepted an £82.7 billion mixed stock and shares offer from Netflix in early December, with advisers labelling it a “best and final proposal”. Should Warner shareholders reject the Netflix agreement, the company would be liable for a £4.3 billion break fee and face an estimated £1.5 billion in additional financing costs in the event that a planned debt exchange fell through.

Paramount, having failed to reach a direct agreement, initiated a tender offer for Warner shares which will remain open until 8 January. Paramount’s management claims Warner is making excuses to pursue an inferior arrangement with Netflix and insists that its own offer is not the final word, leaving open the possibility of a richer bid in the future.

The acquisition is particularly significant given Warner’s array of valuable film and television assets, including the Harry Potter and Game of Thrones franchises, alongside networks such as CNN. Netflix and Paramount both view control of these brands as transformative to their competitive positioning. At market close, Netflix shares had shown a slight increase after the announcement while Paramount shares declined, reflecting investor scepticism about the ongoing bidding process.