Warner Bros. Discovery backs Netflix as Paramount bid is rebuffed

Warner Bros. Discovery’s board has unanimously dismissed Paramount Skydance’s revised hostile proposal worth 108.4 billion US dollars and reiterated its commitment to the merger deal already agreed with Netflix in December. In a show of support for the Netflix transaction, the WBD directors also urged shareholders to reject Paramount Skydance’s updated bid presented on December 22, 2025.

In a statement issued earlier today, Netflix welcomed the board’s renewed, unanimous endorsement of the fusion agreement announced on December 5, 2025. The WBD board called on shareholders to reject Paramount Skydance’s revised offer, underscoring its confidence in the Netflix deal. Netflix co-CEOs Ted Sarandos and Greg Peters reiterated that the agreement remains a “superior proposal” designed to maximize value for investors, consumers, creators, and the broader industry.

Deal mechanics at a glance

Under the proposed structure, Netflix would acquire Warner Bros. along with its film and TV studios, HBO Max, and HBO through a combination of cash and stock. Key terms per WBD share are:

• Enterprise value: 82.7 billion US dollars
• Equity value: 72.0 billion US dollars
• Cash portion: 23.25 US dollars per WBD share
• Stock portion: 4.50 US dollars in Netflix common stock (subject to a price corridor)
• Expected close: 12–18 months from December 5, 2025

The plan also envisions the separation of the Global Linear Networks unit (Discovery Global), with the separation targeted for completion by the third quarter of 2026.

Why Paramount’s offer is viewed as inferior

WBD chairman Samuel A. Di Piazza Jr. said, despite Paramount’s higher cash per share, the latest bid remains “still inferior.” The board cited several concerns:

• Value question: Paramount’s higher nominal price does not translate into a more attractive overall value proposition.
• Financing risks: The transaction would amount to the largest leveraged buyout in history, requiring an exceptionally high level of indebtedness.
• Shareholder protection: Questions persist about protections for WBD shareholders if the Paramount deal were to fail.
• Operational constraints: Proposed covenants during the anticipated 12–18‑month closing window could disrupt ongoing operations.

The costs of switching deals

WBD emphasized the potential financial penalties tied to aborting the Netflix agreement in favor of Paramount. The total price tag on a deal break is about 4.7 billion US dollars, comprising:

• 2.8 billion US dollars breakup fee payable to Netflix
• 1.5 billion US dollars penalty if a debt-exchange offer is not completed
• 350 million US dollars in additional financing costs

Consequently, Paramount’s termination payment of 5.8 billion US dollars would leave WBD with effectively roughly 1.1 billion US dollars if the Paramount agreement were not consummated.

Regulatory scrutiny and political backdrop

Netflix has filed a Hart-Scott-Rodino notification under U.S. antitrust law and says it is coordinating with the Department of Justice and the European Commission, among others, to ensure an orderly close. The transaction remains under close antitrust scrutiny, with lawmakers in the U.S. House of Representatives’ Antitrust Subcommittee convening hearings on media consolidation and potential industry implications. Former President Trump has indicated he may weigh in on the decision and has characterized the Netflix–WBD tie‑up as a potential competition issue.

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Netflix’s financial strength as a differentiator

WBD argues that Netflix’s financial profile sets the deal apart from Paramount’s highly leveraged approach. Netflix’s metrics highlighted by WBD include:

• Market capitalization near 400 billion US dollars
• Investment-grade ratings of A and A3
• Projected free cash flow for 2026 exceeding 12 billion US dollars
• A more traditional, less leveraged funding framework relative to the Paramount plan

These factors, according to WBD, underpin a more stable and predictable financing pathway for the proposed Netflix deal.

Market reaction and current mood

Netflix shares trade roughly 32% below their mid‑2025 intraday peak and stood near 90–91 US dollars at the start of January. Since the WBD–Netflix merger announcement, the stock has faced pressure, and the resulting decline in market value has surpassed the proposed 83‑billion‑dollar purchase price. Warner Bros. Discovery stock, at around 28.29 US dollars, has shown little movement in response to the Paramount rejection. Over the past year, the bid contest has driven the stock higher by roughly 170%.

What’s ahead: dates to watch

Two forthcoming milestones will shape the near-term narrative:

• January 20, 2026: Netflix releases its fourth‑quarter 2025 results after market close
• January 21, 2026: Deadline for WBD shareholders to tender into Paramount’s hostile offer

Analysts’ current expectations for Q4 put consensus on:

• Earnings per share: 0.55 US dollars (versus 0.43 US dollars in the prior year)
• Revenue: 11.97 billion US dollars, up 16.8% year over year
• Coverage: 29 analysts monitor the stock

Paramount has not yet commented on WBD’s rejection, though it has previously argued that the latest offer should not be regarded as “best and final.” The decision now hinges on whether Paramount raises its bid, adjusts terms to address the board’s concerns, or continues to pursue a direct path to shareholders.

As the saga unfolds, the ultimate outcome will depend on regulatory signals, investor responses, and Paramount’s strategic choices in the ongoing takeover contest.