A Warner Bros. Discovery announced this Wednesday (7) that its board of directors unanimously rejected the revised offer presented by Paramount Skydance to acquire the company. The proposal, worth US$108.4 billion, was considered inadequate due to the high volume of debt financing involved in the operation.
The board maintained its support for the agreement signed with Netflix, valued at around US$82.7 billion, which provides for the sale of the TV and film studios and the streaming division. The decision reinforces the recommendation to shareholders to reject the hostile attack by Paramount.
Paramount Skydance’s offer was revised on December 22, 2025, including personal financing guarantee provided by Larry Ellison. Mesmo therefore, the structure of the proposal continues to present uncertainty regarding the conclusion of the deal.
Details of the board’s rejection
Warner Bros’s advice. Discovery highlighted that Paramount’s proposal depends on a high volume of debt, estimated at more than US$50 billion additionally. Essa dependence increases the risk of the transaction not completing.
Furthermore, the transaction would constitute a highly leveraged acquisition, with gross debt projected at US$87 billion after closing. Esse debt level was identified as the highest ever seen in a transaction of this type.
Financial reasons for the decision
The structure of the Paramount offer provides insufficient value to shareholders when compared to the Netflix deal. The deal with Netflix includes payment in cash and shares, with potential for additional appreciation.
If Warner accepted the rival proposal, it would have to pay significant termination fees upon breaking the contract with Netflix. Esses costs would total around US$4.7 billion, reducing the net benefit to investors.
The Paramount proposal also imposes prolonged operational restrictions on Warner during the approval period. Essas limitations could affect strategic decisions and the company’s competitiveness.
Guarantee of Larry Ellison on offer
Larry Ellison, co-founder of Oracle, provided a personal guarantee of $40.4 billion in equity financing to support Paramount Skydance’s proposal. The commitment aims to cover potential gaps in the operation’s funding.
Despite this assurance, the Warner board maintained that risks remain elevated due to the scale of debt required. Paramount’s credit rating and current cash flow contribute to the uncertainties.
Comparison with agreement Netflix
The deal with Netflix values Warner’s assets at $82.7 billion, with $72 billion paid directly to shareholders. The transaction allows Netflix to strengthen its own production and expand into games and live events.
Unlike the Paramount proposal, the deal with Netflix has a solid balance sheet and investment grade credit rating. Essa structure reduces regulatory and financial risks for Warner shareholders.
The merger with Netflix keeps Warner’s cinematic releases in theaters. The transaction also preserves strategic flexibility for the remaining company.
Context of the dispute in the sector
The dispute reflects the intense consolidation in the streaming and entertainment market. Empresas seek scale to compete with leaders like Disney and Amazon.
- Warner’s catalog includes franchises such as DC Comics, Harry Potter and HBO productions.
- HBO Max has globally recognized premium content.
- Linear TV networks face audience decline.
- Streaming requires ongoing investment in original content.
Risks of a leveraged buyout
Highly debt-dependent acquisitions face historical precedents for difficulty. Mudanças can compromise creditor commitments.
In the case of Paramount, the size of the operation represents almost seven times its current market value. Esse multiple increases exposure to variations in the financial environment.
The estimated period of 12 to 18 months for completion increases uncertainty. During this period, restrictions could limit talent retention and growth initiatives.
Position of shareholders in the transaction
Warner shareholders would receive $23.25 in cash and Netflix stock under the current deal. Essa compounding offers long-term upside potential.
In contrast, Paramount’s offer provides for full cash payment, but with insufficient protection in case of failure. The net termination fee would be significantly reduced after costs.
Next steps in the operation
Warner sent a detailed letter to investors explaining the reasons for the rejection. The company remains focused on executing the plan with Netflix.
Paramount Skydance may choose to improve its proposal or maintain its direct approach to shareholders. The market is monitoring possible new developments in the dispute.
The Warner board reaffirmed that the path with Netflix balances better returns and security. Essa position aims to maximize sustainable value for shareholders.
Impact on the entertainment market
Consolidation changes the competitive landscape of global streaming. The union of premium catalogs strengthens positions in original content.
Remaining companies gain flexibility to focus on areas such as sports and news. The planned separation of Discovery Global maintains diversified assets.
The sector faces challenges with the transition from linear TV to digital platforms. Investimentos in technology and production remain essential for growth.
