In a significant escalation of the battle for one of Hollywood's most iconic studios, Warner Bros. Discovery Inc. has formally rejected an amended takeover proposal from Paramount Skydance Corp. The company's board is instead urging its shareholders to support a previously announced agreement with streaming titan Netflix Inc.
Board Cites Financing Risks in Paramount's "Largest LBO"
The rejection, communicated in a letter to shareholders on Wednesday, January 7, 2026, centers on deep skepticism about Paramount's ability to finance and close what Warner Bros. describes as effectively the largest leveraged buyout in history. Paramount's offer values Warner Bros. shares at $30 each, compared to Netflix's offer of $27.75 per share in cash and stock for the studio and streaming assets.
Warner's board highlighted the staggering scale of debt required. They noted that Paramount, with a market value of approximately $14 billion, is attempting an acquisition needing $94.65 billion in combined debt and equity financing. This figure is nearly seven times Paramount's total market capitalization.
"The extraordinary amount of debt financing as well as other terms of the PSKY offer heighten the risk of failure to close, particularly when compared to the certainty of the Netflix merger," the company stated. The board expressed concerns that changes in market conditions or company performance could jeopardize the complex financing arrangements.
Ellison's Personal Guarantee Fails to Sway Warner Bros.
Paramount's latest push included a notable sweetener: billionaire Larry Ellison, chairman of Oracle Corp. and a controlling force behind Paramount alongside his son David, personally guaranteed $40.4 billion in equity financing for the hostile bid. Despite this show of financial muscle, it was not enough to alleviate Warner Bros. Discovery's doubts.
This rejection marks the latest volley in an increasingly contentious fight for the storied studio, home to legendary franchises like Batman and Harry Potter and the premium television network HBO. Paramount has been pursuing Warner Bros. for months, directly competing with the globally dominant Netflix.
Shareholder Decision and Industry Reshaping Loom
The path forward now hinges on shareholder decisions. Warner Bros. announced its deal with Netflix on December 5, which involves spinning off its cable-TV networks to shareholders before the sale closes. Paramount, whose offer is for the entire company including cable assets, took its $30-per-share cash offer directly to shareholders on December 8. They have until January 21 to tender their shares to Paramount.
Market reaction was muted following the news. Warner Bros. shares traded slightly up at $28.68, while Paramount and Netflix shares saw minimal movement. Analysts suggest the saga is far from concluded. Bloomberg Intelligence analyst Geetha Ranganathan noted that Paramount may need to raise its offer to at least $32 per share to restart negotiations.
Acquiring Warner Bros. Discovery would be a transformative move for either suitor, delivering a vast content library and significantly bolstering streaming capabilities. The outcome will undoubtedly reshape the competitive landscape of the global entertainment industry.
