WBD Board Rejects Paramount’s Hostile Bid Affirming Netflix Merger

Warner Bros. Discovery, Inc. (WBD) announced its Board of Directors (WBD Board) has unanimously recommended that shareholders reject Paramount Skydance’s (PSKY) amended tender offer from Dec 22, 2025. Additionally, the company has reaffirmed its commitment to proceed with the previously announced merger with Netflix. 

In a letter to shareholders, on Jan 7, 2026, the WBD board wrote that Paramount Skydance’s $108.4 billion USD proposal “remains inadequate” and lacks certainty, particularly around financing and execution. The board determined that PSKY’s offer has no clear advantage over the Netflix-backed transaction and is not “even comparable” to NFLX’s proposition. 

The board reiterated that the Netflix deal remains the “superior proposal” in terms of value and offers certainty of closing, according to the company’s filing. Board Chair Samuel A. Di Piazza, Jr. stated that the board had carefully reviewed the revised offer and concluded it failed to address fundamental concerns raised earlier.

He said the Paramount Skydance bid includes “terms such as an extraordinary amount of debt financing that create risks to close and lack of protections for our shareholders if a transaction is not completed.”

PSKY Offer Insufficient to Close Transaction

The WBD board’s rejection centers on what it described as the structural weaknesses of PSKY’s revised offer. To complete the deal, PSKY, a company with a $14B market capitalization, has proposed a $94.65B of debt and equity financing, which raises questions about the long-term financial stability of the company and its ability to complete the transaction on the proposed terms.

According to the WBD board’s letter, the proposal relies on a highly leveraged buyout (LBO) structure that would posit a “$87 billion of total pro forma gross debt and an estimated gross leverage of approximately 7x 2026E EBITDA before synergies.” The board also highlights that Paramount has “repeatedly failed to submit the best proposal for WBD shareholders,” despite the board clearly instructing and pointing out the financing issues.

The board has highlighted PSKY’s current financial conditions, highlighting that Paramount “already has a ‘junk’ credit rating and it has negative free cash flows with a high degree of dependency on its legacy linear business,” noting that the offer remains subject to multiple conditions. It further notes that in cases of previous significant LBOs, “acquirors or their equity and/or debt financing sources can, and do, seek to assert failures of closing conditions in order to terminate a transaction or renegotiate transaction terms.” 

In contrast, the Netflix transaction, the board said, provides clearer funding sources, fewer contingencies, and a more predictable closing timeline. WBD emphasized that abandoning the Netflix deal in favor of the Paramount Skydance bid would also expose the company to termination fees and execution risks without delivering commensurate upside for shareholders.

What Netflix Will Acquire After the WBD Merger

Under the transaction reaffirmed by the board, Netflix is set to acquire Warner Bros. Discovery’s core studio and streaming operations following the separation of Discovery Global. According to WBD’s earlier announcement, the deal values the assets at approximately $82.7B in total. 

The assets slated to move to Netflix include Warner Bros. Pictures, Warner Bros. Television, HBO, and the HBO Max streaming platform, along with WBD’s film and television content libraries and associated intellectual property. The transaction leaves out Discovery Global that includes Warner’s cable TV networks, which the board deemed to be beneficial for shareholders.

The WBD board has determined that this proposed merger with Netflix can maximize the value of WBD’s assets. After the merger goes through, Netflix will own the DC universe, Casablanca, Harry Potter, The Wizard of Oz, and streaming hits like Game of Thrones.

The Netflix deal, however, is not without hurdles. Antitrust regulators are expected to closely scrutinize the transaction on antitrust grounds, and labor unions have already raised concerns about potential job impacts and box-office revenue loss for broader Hollywood productions.