Warner Bros. Discovery Rejects Paramount's Latest Takeover Bid, Demands Better Offer Within Seven Days
In a significant development in the media industry, Warner Bros. Discovery (WBD) has formally rejected the latest takeover bid from Paramount-Skydance, which offered $30 per share. However, the company has granted Paramount a seven-day window to submit an improved proposal to acquire WBD, the owner of HBO Max and the Harry Potter franchise.
Deadline Set for "Best and Final Offer" Amid Ongoing Negotiations
According to a Reuters report, Paramount has until February 23 to present its "best and final offer." Under the terms of the existing merger agreement with Netflix, Netflix retains the right to match any superior bid. This move follows informal discussions where Paramount hinted at raising the share price to $31, a prospect that initially engaged WBD in talks.
Despite this, WBD has made it clear that it continues to prefer the deal with Netflix, with the likelihood of switching partners remaining low. In a letter to the Paramount board, seen by Reuters, WBD Chairman Samuel DiPiazza Jr and CEO David Zaslav stated, "Our Board has not determined that your proposal is reasonably likely to result in a transaction that is superior to the Netflix merger. We continue to recommend and remain fully committed to our transaction with Netflix."
Competition Intensifies for Control of Warner Bros. Discovery
The rivalry between Paramount and Netflix for control of WBD underscores the intense pressures reshaping the entertainment landscape. Both companies are vying for WBD's extensive assets, including its film and TV studios and vast content library, as the industry grapples with rapid changes driven by streaming and consolidation.
An unidentified Paramount financial advisor revealed to Reuters that the offer could be increased to $31 per share if WBD agreed to open negotiations, with potential for even higher valuations. In response, WBD indicated in its letter that it now expects any final proposal to exceed this amount, highlighting unresolved financial issues.
Financial Details and Shareholder Vote Loom Large
Paramount's current bid for the entire company stands at $108.4 billion, while Netflix is offering $27.75 per share, or $82.7 billion, specifically for WBD's studio and streaming businesses. WBD, which has repeatedly turned down Paramount's offers to buy the whole company, is proceeding with a shareholder vote on the Netflix merger scheduled for March 20.
This vote will occur after WBD spins off its Discovery Global cable operations—including CNN, TLC, Food Network, and HGTV—into a separate, publicly traded entity. Paramount has criticized WBD's board for not engaging meaningfully across six offers made in the 12 weeks prior to the Netflix merger announcement on December 5, 2025.
Activist Investors and Legal Hurdles Add Complexity
The situation is further complicated by pressure from activist investor Ancora Holdings, which holds a stake worth nearly $200 million and plans to oppose the Netflix transaction. Ancora argues that the WBD board did not adequately engage with Paramount and Skydance regarding their rival bid for the entire company, including cable assets like CNN and TNT.
Paramount is even pushing to add directors to the WBD board, with Matt Halbower, CEO of Pentwater Capital Management, cited as a potential nominee. Pentwater, which owns about 50 million shares of WBD, supports Paramount's bid. Halbower asserted, "Every substantive complaint that the Warner Bros board had with Paramount's previous offer has been addressed."
Key Issues Remain Unresolved in Paramount's Proposal
To facilitate talks with Paramount, WBD secured a special waiver from Netflix, allowing limited negotiations if the board deems a rival offer potentially superior. Netflix expressed confidence in its deal, stating, "While we are confident that our transaction provides superior value and certainty, we recognise the ongoing distraction for WBD stockholders and the broader entertainment industry caused by PSKY's antics."
However, WBD pointed out that Paramount's amended merger agreement still falls short of being considered a superior proposal. Key unresolved issues include coverage of a potential $1.5 billion junior lien financing fee, contingencies if debt financing fails, and the certainty of equity funding backed by Oracle founder Larry Ellison.
The letter noted that while Paramount downplayed financing concerns due to the "personal wealth of your lead equity sponsor and the credibility of your lending banks," draft agreements now require additional equity if debt financing becomes unavailable. This highlights the ongoing financial and strategic complexities in the high-stakes battle for Warner Bros. Discovery.
