Warner Bros. Discovery has rejected Paramount Global's hostile takeover proposal, alleging that the Ellison family misled shareholders in the process.
Based in Burbank, California, Warner Bros. Discovery has agreed to sell a majority of its business to Netflix for $83 billion in cash and stock. On December 17, Warner Bros. Discovery criticized Larry Ellison and his son David Ellison, urging shareholders to reject their unsolicited bid and accusing the Ellison family of providing misleading assurances.
Paramount Global, controlled by the Ellison family, previously claimed its proposed acquisition was "fully guaranteed" by the billionaire family. However, Warner Bros. Discovery countered in a letter to shareholders, stating, "This is not true—there has never been any such full guarantee."
The rejection adds another hurdle to Paramount’s months-long pursuit of the deal. Analysts suggest the acquisition is critical for Paramount to compete with streaming giants like Netflix, Disney, and Amazon. Earlier this month, Warner Bros. Discovery turned down Paramount’s $108 billion all-cash offer for full ownership, opting instead for Netflix’s $83 billion deal.
Paramount has submitted six bids in 12 weeks and now faces tough decisions, including whether to raise its offer. A Paramount spokesperson declined to comment.
If the Netflix-Warner Bros. Discovery deal proceeds, it would reshape Hollywood’s landscape, transferring HBO Max and Warner Bros. Studios to Netflix. With its dominant subscriber base, Netflix would also gain major franchises like Batman, Harry Potter, and Looney Tunes, expanding its influence in gaming and consumer products.
Undeterred, Paramount alleges unfair treatment in the bidding process and last week launched a hostile takeover by directly approaching Warner Bros. Discovery shareholders. In its letter, Paramount insisted its offer delivers "superior value, speed, and certainty" compared to the Netflix deal.
Warner Bros. Discovery defended its sale process on December 17, calling it "comprehensive, transparent, and competitive." The company disclosed extensive negotiations with Paramount, including four in-person meetings between CEO David Zaslav and the Ellison family. David Ellison’s bid is backed by his father, Oracle co-founder and billionaire Larry Ellison.
A legal filing revealed Zaslav informed Warner’s board that the Ellisons offered him hundreds of millions in compensation if the deal succeeded—an arrangement he deemed inappropriate.
Paramount claims the Ellison family will guarantee $40 billion in equity financing, but concerns arose as the backing comes from Larry Ellison’s revocable trust. Warner’s board warned that such a trust lacks the certainty of a direct commitment, as its assets and liabilities are undisclosed and subject to change.
The board repeatedly emphasized the need for an "unconditional financing guarantee" from the Ellisons, fearing limited recourse if the deal collapses. Paramount’s $15 billion market cap pales next to Warner’s, making financing pivotal.
Paramount assured investors the Ellison trust holds over $250 billion, including 1.16 billion Oracle shares, and has facilitated other public-company deals. It dismissed doubts about the family’s financial capacity as "absurd" and secured $54 billion in loans from Bank of America, Citigroup, and Apollo Global.
Warner’s agreement with Netflix bars it from soliciting rival bids, but Paramount could still submit a higher offer. If Warner chooses another buyer, it must pay Netflix a $2.8 billion breakup fee. Netflix could also adjust its bid to counter Paramount.
Paramount may lobby Warner shareholders to vote against the Netflix deal, with a vote expected no earlier than April. Regulatory approval remains a key variable, as the U.S. government must greenlight such major transactions.
Warner stated both deals face similar regulatory risks but noted Netflix’s $5.8 billion breakup fee—higher than Paramount’s $5 billion—if blocked.
While the outcome remains uncertain, one thing is clear: Zaslav’s deal-making has won shareholder approval, a stark turnaround from earlier this year.
In March, Zaslav faced criticism for prioritizing personal gains over Warner’s revival, with shares plunging to $7.50—down from $25 when he took over. Since then, Warner’s studio success, including two Oscar-nominated films, and strategic shifts like HBO Max’s revamp have driven shares to $28.90 as of December 16.
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