Warner Bros. Discovery (WBD) has advised its shareholders to reject Paramount’s latest takeover offer, calling it inferior to the company’s existing merger agreement with Netflix.
In a letter to shareholders backed by an SEC filing, the WBD board said it unanimously believes the Netflix deal offers greater value with fewer risks. The board argued that Paramount’s proposal carries higher financing, regulatory and execution uncertainties compared with the Netflix transaction.
The entertainment conglomerate said accepting Paramount’s bid could expose the company to billions of dollars in termination fees and financing costs if the deal fails, significantly reducing shareholder value. By contrast, the Netflix agreement imposes no such downside risks on WBD, according to the board.
Paramount, led by David Ellison, has made six offers so far and recently went directly to WBD shareholders. The studio argues it would face fewer regulatory hurdles than Netflix, though WBD said it sees no material difference in regulatory risk between the two deals.
The board also raised concerns about Paramount’s heavily leveraged financing structure, describing it as a high-risk transaction that could restrict WBD’s operations for up to 18 months.
Netflix has confirmed it has begun regulatory filings, while WBD said it remains focused on completing the Netflix merger.
