Warner Bros. (WBD.US) once again rejects Paramount's revised offer: says the bid is insufficient and the risk is high

The Zhitong Finance App learned that Warner Bros. Exploration (WBD.US) determined that Paramount Tianmu (PSKY.US)'s revised takeover offer was inferior to the existing deal it had already reached with Netflix (NFLX.US), and urged its shareholders not to transfer shares to this “intervener.”

Warner Bros.'s board of directors said in a letter to shareholders on Wednesday that the value provided by Paramount's offer was insufficient and that the company doubted Paramount's ability to complete the deal. Paramount submitted an amended offer on December 22, reaffirming plans to buy shares at $30 per share, but added higher “break-up fees,” and billionaire Larry Ellison promised personal guarantees for the $40.4 billion equity financing to support the deal.

The Warner Bros. board of directors once again expressed concern over the more than $50 billion loan requirement in the Paramount deal and characterized it as “the largest leveraged acquisition in history.”

The company said, “Compared to the certainty of the Netflix merger, the huge debt financing and other terms in the Paramount Tiandance offer increased the risk of a failed deal. Changes in the target company or acquirer's performance or financial position, as well as changes in the industry or financing environment, may jeopardize these financing arrangements.”

The letter mentioned that the board of directors said the proposal continues to limit Warner Brothers' ability to operate until the transaction is completed, such as limiting the signing of technology infrastructure contracts worth more than $30 million per year. The board said the restrictions could “damage” Warner Bros.'s business for 12 to 18 months before the deal was completed, and give Paramount an excuse to abandon the deal during that time.

The board of directors stated in its letter that if the agreement with Netflix were to be terminated for the Paramount deal, Warner Bros. would incur costs of $4.7 billion. According to the letter, this includes $2.8 billion in break-up fees owed to Netflix by Warner Brothers, $1.5 billion in expenses due to failure to complete debt replacement, and additional borrowing expenses of approximately $350 million. This means that even if Paramount offered $5.8 billion in termination fees when the deal broke down, Warner Bros. would only have $1.1 billion left.

Paramount is controlled by Oracle Chairman Larry Ellison and his son David Ellison, and has been trying to buy Warner Bros. (the parent company of HBO and its eponymous film and television studio) for months.

A series of takeover offers initiated by Paramount prompted the company to seek sale in October last year. On December 5, 2025, Warner Bros. announced an agreement to sell its studio and streaming business to Netflix for $27.75 per share in cash plus stock. Warner Bros. plans to divest its cable network to shareholders before the deal with Netflix is completed.

After the bid failed, Paramount directly invited shareholders to buy shares in cash of $30 per share.

Paramount argues that its offer to buy the entire company is superior to Netflix and is more likely to be approved by regulators. Warner Brothers, on the other hand, said it believes the two deals have an equal chance of passing regulatory scrutiny.

Netflix said on Wednesday that it has filed a regulatory filing and is in contact with antitrust agencies including the US Department of Justice and the European Commission.

“Netflix remains committed to working closely with Warner Bros. Explorers, regulators and all stakeholders to ensure the smooth and successful completion of the transaction,” Netflix said in a statement.

Much of the debate has focused on the value of Warner Bros. cable networks such as TNT and CNN, which are losing viewers and advertisers as consumers switch to streaming.

Paramount believes the networks are valued at around $1 per share, while analysts think they may be worth more. The lower the valuation of cable TV assets, the more advantageous Paramount's bid. If shareholders think that the cable TV business is valued higher, Netflix's bid (assuming these businesses will be divested) means investors can get a larger total amount of capital.

The Warner Bros. board of directors said in the letter that investors are getting more value from the divestment of the cable TV business and Netflix shares under the current deal compared to the Paramount deal.

The letter reads: “The merger plan negotiated by the board of directors with Netflix maximizes value while reducing downside risk. We agree that merging with Netflix is in your best interest.”