In a decisive move that underscores the high-stakes drama unfolding in Hollywood's merger landscape, Warner Bros. Discovery (WBD) has once more rejected a takeover proposal from Paramount Skydance, deeming it too risky and undervalued despite its eye-popping $108.4 billion price tag.
The board's unanimous vote against the amended all-cash offer of $30 per share highlights ongoing concerns about financing uncertainties and potential execution pitfalls, favoring instead a pending merger with Netflix announced in December 2025.
The rejection, detailed in a letter to shareholders on January 7, 2026, comes amid suspicions that Paramount Skydance — led by CEO David Ellison — may not have the financial muscle to pull off such a colossal deal without heavy reliance on external debt and backers.
Analysts point out that the proposal would saddle the combined entity with approximately $87 billion in debt, marking it as potentially the largest leveraged buyout in history. This level of borrowing raises red flags, especially given the volatile media industry where streaming giants like Netflix currently boast a market cap around $300 billion, far outpacing WBD's valuation but without the same debt overhang.
Paramount Skydance's bid, while formally exceeding Netflix's implied value in its merger terms with WBD, fails to address key risks, according to the board. One major sticking point is the potential breakup fee owed to Netflix's CEO Ted Sarandos if the deal falls through — estimated in the billions — which could strain cash reserves.
Furthermore, the financing patchwork involves a mix of investors, including Oracle co-founder Larry Ellison (David's father), who has pledged a $40 billion guarantee, alongside rumored contributions from Middle Eastern sovereign funds and other high-net-worth individuals.
However, WBD's leadership remains unconvinced, noting Ellison's reluctance to bolster the offer with additional cash or ironclad commitments, leaving room for last-minute pullouts that could derail the transaction.
This isn't the first time WBD has turned down Paramount Skydance; it's the eighth such rebuff, echoing the protracted battles of yesteryear. Industry experts draw parallels to the late-2010s showdown between Disney and Comcast over 21st Century Fox's assets, where aggressive bidding wars drove up prices but also amplified risks for all parties involved.
In that case, Disney emerged victorious with a $71.3 billion deal, reshaping the entertainment sector by absorbing key franchises like Marvel and Star Wars. Here, the stakes are even higher, as control over WBD would grant access to iconic properties such as DC Comics, HBO, and the Warner Bros. film library, potentially consolidating power in an already concentrated market.
Adding to the intrigue, Paramount Skydance's aggressive pursuit follows its own recent history of mergers. Just two years prior, in 2024, Skydance merged with Paramount Global in a $28 billion deal that aimed to revitalize the struggling studio amid cord-cutting trends and streaming competition.
David Ellison, leveraging his family's tech ties — his father Larry's Oracle empire has long intersected with Hollywood through investments in content tech — has positioned the company as a disruptor. Yet, critics argue this latest bid smacks of overreach, with little organic capital and heavy dependence on "borrowed threads" from a diverse investor pool.
WBD's board, in its SEC filing, emphasized that the Paramount offer "is not more favorable to WBD stockholders than the Netflix Merger and continues to be inadequate," citing insufficient value and myriad uncertainties. Shareholders are urged not to tender their shares, with the board reiterating support for the Netflix tie-up, which promises synergies in streaming (Max and Netflix) and content production without the same debt burden.
As the dust settles, the media world watches closely. This rejection could spark a renewed bidding frenzy, potentially drawing in other suitors or escalating into a proxy fight. For now, though, WBD stands firm, betting that stability with Netflix trumps the flashy but fraught allure of Paramount Skydance's proposal. In an era where content is king, the real battle may just be beginning.
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