In a significant development shaping the future of global media, Warner Bros. Discovery has formally advised its shareholders to reject the revised hostile takeover bid from Paramount Global. The company's board has thrown its weight behind the existing agreement with streaming titan Netflix, declaring the Paramount proposal inferior and laden with risk.
Board Unanimously Backs Netflix, Calls Paramount Offer Inadequate
In a public letter to shareholders released on Wednesday, January 7, 2026, Warner's board delivered a stark assessment. They stated that Paramount's amended all-cash offer of $77.9 billion for the entire company is not superior, and is "not even comparable" to the $72 billion deal already in place with Netflix. The Netflix agreement involves the sale of Warner's iconic movie and TV studios, along with the HBO Max streaming service.
The board highlighted multiple concerns with the Paramount bid, including insufficient value for shareholders and significant uncertainty around Paramount's ability to successfully close such a massive transaction. They warned of potential risks to shareholders if the Paramount deal were to fall through after Warner abandoned its Netflix pact.
Financial Risks and the Leveraged Buyout Concern
Warner outlined substantial financial penalties it would face by switching deals. Walking away from Netflix would trigger a $2.8 billion termination fee. Additionally, the company would incur a $1.5 billion fee for failing to complete a planned debt exchange, which it claims would be impossible under Paramount's offer structure.
The company framed the Paramount proposal as effectively a historic leveraged buyout, warning that such deals become riskier with higher debt levels. Warner cautioned shareholders that buyers in leveraged transactions sometimes attempt to renegotiate terms before closing, especially if industry conditions shift. "Changes in the performance or financial condition of either the target or acquirer, as well as changes in the industry or financing landscapes, could jeopardize these financing arrangements," the company stated.
Paramount's Revised Terms and Shareholder Deadline
Paramount's latest bid, intended to lure Warner away from Netflix, included a personal guarantee from billionaire Larry Ellison for $40.4 billion in equity financing. Larry Ellison is the father of Paramount's CEO, David Ellison. The media giant also increased its breakup fee—the penalty paid if regulators block the deal—to match Netflix's $5.8 billion.
Despite these changes, Warner's rejection stands. Shareholders now have until January 21, 2026 to decide on Paramount's tender offer, a deadline that can be extended further. Warner's stock has been trading above the value of the Netflix deal, indicating market anticipation of a higher bid from Paramount.
Strategic Stakes and Regulatory Hurdles Ahead
The battle centres on Warner's coveted content library, home to franchises like Harry Potter and Batman. For Netflix or Paramount, acquiring these assets is a strategic move to achieve scale and attract streaming subscribers in a competitive market.
Any final deal will face intense regulatory scrutiny. A Netflix-Warner combination has drawn concerns from some lawmakers, including former President Trump, over the market power Netflix would wield with HBO Max. Conversely, a Warner-Paramount merger would unite two major content producers, potentially raising antitrust questions. Paramount has argued its proposal has a clearer regulatory path.
Netflix has expressed confidence in gaining approval and welcomed Warner's continued commitment. Hollywood unions are watching closely, worried about the impact of either mega-merger on industry workers.
This high-stakes corporate drama continues to unfold, with Warner shareholders holding the key to the next chapter. The company's planned split—with its cable TV networks like CNN and TBS becoming a separate entity called Discovery Global—adds another layer of complexity to this landmark media showdown.
