The board of directors of Warner Bros Discovery announced this Wednesday that it rejected "unanimously" Paramount Skydance's revised offer to acquire the entire group. Samuel A. Di Piazza Jr.The chairman of the board stated that Paramount's proposal remained "Inferior to our merger agreement with Netflix on several key points" and included "Significant costs, risks and uncertainties."
An offer deemed too risky for shareholders
Warner highlighted debt financing, which it described as "extraordinary level"which would increase the risk of the deal failing compared to the certainty offered by the merger with Netflix. Management insisted that if Paramount did not finalize its offer, "WBD shareholders would incur significant costs"making the proposal "neither superior nor even comparable" to that of Netflix.
Paramount is not increasing the amount but is changing the guarantees.
Paramount had announced a $108 billion offer, including a $40,4 billion personal guarantee from Larry Ellison, whose son David leads Paramount Skydance. Despite these adjustments, Warner felt the offer remained unfavorable, due to its heavy reliance on debt financing and a lack of shareholder protections.
Netflix remains Warner's strategic preference
The board reaffirmed its commitment to the agreement reached with Netflix in December, for the acquisition of Warner Bros. studios and HBO assets, including the HBO Max channels and streaming service, for $82,7 billion including debt. According to Warner, this deal offers "a higher degree of certainty" et "fewer risks and potential costs" than Paramount's proposal.
Netflix welcomes the decision and confirms the merger
Netflix described the council's decision as "Comprehensive and rigorous" and reaffirmed its commitment to completing the merger. Unlike Paramount's offer, the agreement with Netflix excludes linear channels like CNN and Discovery, which would be grouped into a new publicly traded company called Discovery Global.
Warner shareholders urged to reject Paramount's offer
Warner Bros. Discovery has urged its shareholders to reject Paramount's offer, warning against the "potential significant consequences" in the event of failure of this transaction. This standoff illustrates the growing pressure on large media groups to achieve critical mass in an increasingly competitive streaming market, where alliances and consolidations are profoundly redefining the industry.
