Industry

Warner Bros. Discovery’s board has rejected Paramount Skydance’s $108.4bn bid for the entirety of the company, opting instead to back Netflix’s proposal for WBD’s non-cable assets. The board’s unanimous decision concluded that the Paramount Skydance offer was “inferior” and “not in the best interests of WBD,” and that it failed to qualify as a “Superior Proposal” under the terms of WBD’s existing merger agreement with Netflix. In a pointed message to shareholders, WBD noted that the rationale for rejecting the bid “should not come as a surprise” to Paramount Skydance, citing the company’s “clear and oft-repeated feedback” on six previous proposals.

The letter went further, accusing Paramount Skydance of misleading shareholders by claiming its offer was fully backstopped by the Ellison family. While the bid included a $40.65bn equity commitment, WBD stated that there was “no Ellison family commitment of any kind,” arguing instead that the proposal relied on “an unknown and opaque revocable trust” to secure critical funding. WBD also dismissed suggestions that the Paramount Skydance deal would face meaningfully lower regulatory risk, saying it did not believe there was “a material difference in regulatory risk” between the two transactions.

In recent days, both bidders had intensified lobbying efforts. Paramount Skydance launched the strongerhollywood.com website and published an open letter to shareholders, positioning its proposal as offering greater long-term value and faster regulatory clearance. Those efforts now appear to have fallen flat. Adding to the uncertainty, Florida-based private equity firm Affinity Partners has reportedly withdrawn from part-financing Paramount Skydance’s cash offer. Affinity is owned by Jared Kushner, President Trump’s son-in-law. Its exit leaves any renewed bid dependent on funding from several Middle Eastern sovereign wealth funds, with the possibility of another counter-offer from the Ellison family and Paramount Skydance still looming.

Absent further hostile moves from Paramount Skydance, regulatory scrutiny in both the US and Europe is now shaping up as the principal obstacle to Netflix completing the deal. Attention is expected to focus in particular on the combined market share of Netflix and HBO Max in the global streaming sector.