Warner Bros Discovery is likely to reject Paramount Skydance’s amended $108.4bn hostile bid despite a personal guarantee from billionaire Larry Ellison backing the media giant’s offer, according to a person familiar with the matter. The board has yet to make a final decision but is expected to meet next week, said the person, who requested anonymity. Warner Bros and Paramount declined to comment on the board’s position, CNBC reported earlier.
The decision could keep Warner Bros on track to pursue a rival cash-and-stock deal with Netflix despite Paramount’s attempt to sweeten its offer. Ellison, whose son David is chair and CEO of Paramount, personally guaranteed the equity underpinning the bid, hoping to ease doubts that had dogged its earlier proposal. The company did not increase its all-cash offer of $30 a share but it raised its regulatory reverse termination fee to match Netflix and extended its tender offer deadline.
Netflix’s $82.7bn offer, while lower in headline value, presents a clearer financing structure and fewer execution risks, analysts have said. Under terms of that agreement, Warner Bros would face a $2.8bn breakup fee if it walks away from the Netflix deal. Harris Oakmark, Warner Bros’ fifth-largest investor with 96-million shares, said the revised offer is not “sufficient” and is not enough to cover the breakup fee.
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Paramount has argued its bid would face fewer regulatory obstacles. A combined Paramount-Warner Bros entity would create a studio larger than industry leader Disney and merge two major television operators. Warner Bros’ board previously urged shareholders to reject Paramount’s $108.4bn bid for the entire company, including its cable television assets, citing concerns over financing certainty and the absence of a full guarantee from the Ellison family. Paramount has argued its offer is more market-proof than Netflix’s $82.7bn proposal, whose value has fluctuated with Netflix’s share price.
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