Warner Bros. Discovery Takeover Intensifies

Warner Bros. Discovery faces an intensifying takeover contest after its board on Jan. 7, 2026, unanimously urged shareholders to reject Paramount Skydance’s amended all-cash tender offer and remain with the Netflix agreement, citing concerns about value, financing, and execution risk.

Board Recommends Netflix Over Paramount Offer

In Amendment No. 3 to its Schedule 14D-9 filed with the SEC, Warner Bros. Discovery’s board detailed why Paramount Skydance’s amended tender offer is not in the company’s best interests and does not qualify as a "Superior Proposal." The board urged shareholders to reject Paramount’s offer and support the Netflix transaction.

The board identified key objections: Paramount’s proposal offers insufficient value once costs and uncertainties are factored in; it relies on an extraordinary level of debt financing that raises risks to closing and the combined company’s capital structure; and it provides limited protections for shareholders if the deal fails. The board said, “Our binding agreement with Netflix will offer superior value at greater levels of certainty, without the significant risks and costs Paramount’s offer would impose on our shareholders.”

The Netflix merger agreement, announced Dec. 5, 2025, would have Netflix acquire Warner Bros. Discovery’s HBO network, streaming, and studios businesses. Shareholders would receive $23.25 in cash per share plus Netflix common stock with a target value of $4.50 per share, subject to a collar, along with equity in a spun-off "Discovery Global" entity holding remaining cable assets. The board values the transaction at roughly $82.7 billion and cited Netflix’s approximately $400 billion market capitalization, investment-grade balance sheet with A/A3 credit ratings, and estimated 2026 free cash flow exceeding $12 billion to support closing certainty.

The board estimated that abandoning the Netflix deal for Paramount’s offer would trigger about $4.7 billion in aggregate costs, or roughly $1.79 per share. This includes a $2.8 billion termination fee payable to Netflix, a $1.5 billion fee tied to a failed planned debt exchange, and about $350 million in incremental interest expense. These costs would reduce the net economic benefit of Paramount’s $5.8 billion regulatory termination fee to an effective net of about $1.1 billion.

Paramount Reaffirms All-Cash Tender Offer

Paramount Skydance launched a hostile all-cash tender offer on Dec. 8, 2025, seeking to acquire all outstanding Series A common stock of Warner Bros. Discovery at $30.00 per share. In an amended proposal dated Dec. 22, Paramount secured $54.0 billion of committed debt financing and added an irrevocable personal equity-financing guarantee from Larry Ellison. Paramount emphasizes that its 100% cash bid reduces exposure to stock-price volatility.

On Jan. 8, 2026, Paramount reaffirmed its commitment to the cash tender and said it had “cured every issue raised by WBD on December 17.” Paramount’s public materials calculate the Netflix package’s value at $27.42 per share based on current market prices, arguing this is inferior to the cash offer. Paramount also cited recent trading in Versant Media as a comparable that undercuts the practical value of the Discovery Global stub.

Shareholders Remain Divided

Some of Warner Bros. Discovery’s largest investors remain split between backing the Netflix agreement and supporting Paramount’s hostile all-cash offer. This division leaves open the possibility that Paramount’s tender contest could gain traction despite the board’s unanimous recommendation.

Both transactions are subject to customary closing conditions and antitrust review. Shareholders must weigh the immediacy and certainty of Paramount’s cash bid against the mix of cash, stock, and a spun-off linear-cable stub in the Netflix package, alongside the board’s analysis of costs and risks outlined in its Schedule 14D-9 filing.