The board of directors at Warner Bros. Discovery Inc. has issued a firm recommendation to its shareholders, urging them to reject an unsolicited takeover bid from Paramount Skydance Corp. The board is advising investors to instead support the company's previously announced agreement to sell its streaming and studio assets to Netflix Inc., calling the Paramount offer "inferior" and "inadequate."
Board Raises Red Flags Over Paramount's Financing
In a letter to shareholders dated Wednesday, December 17, 2025, the Warner Bros. board detailed significant concerns about the Paramount proposal. A primary issue is the uncertainty surrounding the financing for the deal, which Paramount has valued at US$30 per share in cash for the entire company.
The board specifically pointed to the equity commitment of approximately US$40.7 billion from the Ellison family, which controls Paramount. This commitment is reportedly backed by "an unknown and opaque revocable trust." The board's letter stated that the provided documents contain "gaps, loopholes and limitations that put you, our shareholders, and our company at risk." Furthermore, the board highlighted that Paramount could terminate its offer at any time, creating additional uncertainty.
Comparing the Competing Offers
The battle for Warner Bros. pits two major entertainment strategies against each other. Paramount, parent of CBS and Nickelodeon and led by software billionaire Larry Ellison and his son, CEO David Ellison, is seeking to acquire the entire company, including its cable networks like CNN and TNT.
In contrast, the Netflix deal involves a different structure. Warner Bros. plans to spin off its cable networks into a separate company before completing the sale of its streaming and studios business to Netflix. Under this agreement, Warner Bros. shareholders would receive US$27.75 per share in a combination of cash and Netflix stock, plus a stake in the new cable entity.
The board argued that the Paramount bid imposes restrictive limitations on Warner Bros., such as hampering its ability to refinance debt. Accepting it would also force Warner Bros. to pay a hefty US$2.8 billion breakup fee to Netflix for abandoning their merger.
A Bidding War Triggered by Ellison's Pursuit
The regulatory filing reveals that the current situation was triggered by David Ellison's persistent efforts. He first proposed the idea of an acquisition in a meeting with Warner Bros. CEO David Zaslav on September 14, 2025. After the board rejected that initial bid, Ellison made two more unsolicited offers over the following month.
This aggressive pursuit attracted interest from other parties, including Netflix and Comcast Corp., prompting the Warner Bros. board to initiate a formal strategic review. Private negotiations with several suitors followed, with Netflix, Comcast, and Paramount emerging as the most serious contenders.
In its final assessment, the Warner Bros. board unanimously recommended the Netflix merger, concluding that its terms are "superior" while the Paramount offer "provides inadequate value and imposes numerous, significant risks and costs." The fate of one of Hollywood's most iconic studios now rests in the hands of its shareholders.
