Warner Bros. Discovery has, yet again, slammed the door on Paramount’s takeover dreams and honestly, they didn’t even try to sound polite about it.
On Wednesday, January 7, the WBD board sent a letter to shareholders making it crystal clear. Paramount’s new offer still isn’t good enough. Even though Paramount insists it fixed the problems from before, the board called it “inadequate” and warned it comes with way too much financial risk. Basically, thanks, but no thanks.
The biggest sticking point? Money, as always. Paramount’s plan looks a lot like a leveraged buyout, which basically means stacking up tons of borrowed cash. To pull it off, they’d need to raise over $50 billion in new debt. Yeah, you read that right. $50 billion. I had to reread that line twice.
“This structure poses materially more risk for WBD and its shareholders,” the board said, adding that the Netflix deal offers much more certainty. Translation, we’d rather not gamble with our future.
Paramount tried to ease worries by pointing to Oracle billionaire Larry Ellison, who’s helping fund the bid financially. His son, David Ellison, Paramount’s CEO, started this whole saga last year with a surprise approach for WBD’s assets, including CNN. That move turned into a full-on bidding war, and honestly, it’s been messy to watch.
After that initial bid, WBD, led by CEO David Zaslav, opened a formal auction and eventually shook hands with Netflix. That deal values WBD at $27.75 per share, $23.25 in cash and the rest in Netflix stock.
Paramount came back with a higher offer of $30 per share. On paper, that sounds better. But the board still wasn’t buying it. Too much debt, too many restrictions, too much potential headache down the line. Basically, more money now could mean more problems later.
Then there’s the cable TV angle. Assets like CNN aren’t in the Netflix deal. They are expected to be spun off into a new publicly traded company called Discovery Global later this year. WBD thinks it could be worth a lot on its own, but Paramount apparently valued it at just $1 per share. Yeah, $1. The board didn’t exactly keep a straight face at that number.
When Paramount first launched its hostile bid, WBD dismissed it as “illusory” and raised eyebrows about the source of some of the funding, including investors tied to Saudi Arabia, Qatar, and Abu Dhabi. Those concerns didn’t really go away.
In response, Paramount announced on December 22 that Larry Ellison would personally guarantee the $40.4 billion he’s putting into the proposed $78 billion deal. They also raised the breakup fee to $5.8 billion to match Netflix’s penalty, but still didn’t bump up the per-share offer.
Now, with WBD saying no again, Paramount is at a crossroads. They can walk away, try to make a sweeter deal, or take the fight straight to shareholders. Because it’s hostile, they could try to force a vote if they think investors might side with them over the board.
For now though, WBD’s message is pretty clear. We’re not budging. And honestly, it looks like they mean it.
