Warner Bros. rejects takeover bid from Paramount, siding with Netflix’s offer

Warner Bros. again rejected Paramount’s latest takeover bid and told shareholders Wednesday to stick with a rival offer from Netflix.

Warner’s leadership has repeatedly rebuffed Skydance-owned Paramount’s overtures—and urged shareholders just weeks ago to back its the sale of its streaming and studio business to Netflix for $72 billion. Paramount, meanwhile, has sweetened its $77.9 billion offer for the entire company and gone straight to shareholders with a hostile bid.

Warner Bros. Discovery said Wednesday that its board determined Paramount’s offer is not in the best interests of the company or its shareholders. It again recommended shareholders support the Netflix deal.

Late last month Paramount announced an “irrevocable personal guarantee” from Oracle founder Larry Ellison—who is the father of Paramount CEO David Ellison—to back $40.4 billion in equity financing for the company’s offer. Paramount also increased its promised payout to shareholders to $5.8 billion if the deal is blocked by regulators, matching what Netflix already put on the table.

The battle for Warner and the value of each offer grows complicated because Netflix and Paramount want different things. Netflix’s proposed acquisition includes only Warner’s studio and streaming business, including its legacy TV and movie production arms and platforms like HBO Max. But Paramount wants the entire company—which, beyond studio and streaming, includes networks like CNN and Discovery.

If Netflix is successful, Warner’s news and cable operations would be spun off into their own company, under a previously-announced separation.

A merger with either company will attract tremendous antitrust scrutiny. Due to its size and potential impact, it will almost certainly trigger a review by the U.S. Justice Department, which could sue to block the transaction or request changes. Other countries and regulators overseas may also challenge the merger.

—Associated Press