Warner Bros. Discovery Rejects Paramount’s Revised Bid, Citing “Leveraged Buyout” Risks
Warner Bros. Discovery (WBD) has once again turned down a blockbuster acquisition offer—from Paramount Skydance—citing serious concerns over debt, financial risk, and long-term stability. In a sharp public rebuke issued Wednesday, WBD’s board unanimously rejected Paramount’s revised $108.4 billion all-cash proposal, labeling it a “leveraged buyout” that would saddle the combined entity with $87 billion in debt. The move intensifies an already high-stakes Hollywood power struggle, as WBD doubles down on its previously announced $82.7 billion deal with Netflix for its film and TV studio assets.
Why WBD Prefers Netflix Over Paramount
At the heart of WBD’s decision is a stark contrast in deal structures. Netflix’s offer combines cash and stock, offering WBD shareholders a more stable, long-term partnership with a streaming giant that’s already investing heavily in original content. Paramount’s bid, meanwhile, relies almost entirely on borrowed money—$54 billion in new debt, plus a $40 billion guarantee from billionaire Larry Ellison, father of Paramount CEO David Ellison. WBD argues this model puts undue strain on both companies and jeopardizes the very franchises—like “Harry Potter,” “Game of Thrones,” and DC Comics—that make the deal so valuable.
Debt Load Could Crush Combined Company, WBD Warns
In a detailed letter to shareholders, WBD painted a grim picture of the post-merger landscape if the Paramount deal goes through. “Paramount is a company with a $14 billion market capitalization attempting an acquisition requiring $94.65 billion of debt and equity financing—nearly seven times its total market cap,” the company wrote. That level of leverage, WBD contends, would not only strain Paramount’s already “junk” credit rating but could also limit its ability to invest in content, let alone service its debt. For shareholders, that translates to heightened risk of default or restructuring down the line.
Paramount Bypassed the Board—And WBD Isn’t Happy
Paramount’s aggressive tactics haven’t helped its case. After WBD announced its Netflix deal in late 2025, Paramount went straight to shareholders in early December with a $30-per-share cash offer—bypassing the board entirely. WBD immediately dismissed the move as “illusory,” questioning whether Paramount truly had the liquidity to back its claims. Though Paramount later secured the Ellison guarantee, WBD remains unconvinced, arguing that such guarantees don’t equate to immediate, deployable capital. The board urged shareholders to stick with the Netflix transaction, which it says offers both certainty and strategic alignment.
Streaming Wars Enter New Phase
This clash isn’t just about dollars—it’s about the future of entertainment. Netflix, with its massive global subscriber base and data-driven content engine, represents a path toward integrated, scalable storytelling. Paramount, despite its storied studio legacy, has struggled to gain traction in the streaming era. Acquiring WBD could give it instant scale, but at what cost? WBD’s leadership clearly believes the short-term cash boost isn’t worth the long-term financial instability such a merger might bring.
Shareholders Face High-Stakes Decision
Now, WBD shareholders must choose between two vastly different visions. On one side: a cash-heavy, debt-laden gamble with a traditional studio trying to reinvent itself. On the other: a strategic alliance with a digital-first platform that’s already reshaping how audiences consume media. The board’s strong recommendation in favor of Netflix suggests they see more upside in innovation over nostalgia—especially when that nostalgia comes with an $87 billion price tag in liabilities.
Hollywood’s Consolidation Wave Continues
This battle is part of a broader trend: media consolidation in the face of streaming saturation and shifting audience habits. From Disney’s acquisitions to Amazon’s MGM purchase, major players are betting that scale equals survival. But WBD’s resistance to Paramount’s offer shows that not all scale is created equal. In today’s market, financial prudence and operational synergy may matter more than raw asset size—especially when legacy studios are already burdened by balance sheet challenges.
Credit Rating Concerns Add Fuel to the Fire
WBD didn’t shy away from highlighting Paramount’s creditworthiness—or lack thereof. With a “junk” rating from major agencies, Paramount would face steep borrowing costs to finance the acquisition. Those costs, WBD argues, would trickle down into reduced content budgets, layoffs, or even asset sales post-merger. For a library as valuable as WBD’s, that’s a dangerous proposition. Preserving the integrity of iconic franchises may require a partner with stronger financial footing—like Netflix.
What’s Next for the Netflix Deal?
Assuming shareholders side with the board—and early signals suggest they might—the Netflix-WBD merger could close by mid-2026. That would instantly make Netflix one of the most powerful content owners in the world, with full control over beloved IPs and a production pipeline that spans film, TV, and gaming. For consumers, it could mean tighter integration of WBD content into the Netflix ecosystem, potentially limiting availability on rival platforms.
Paramount’s Last Stand?
It’s unclear whether Paramount will mount another bid. The company has already stretched its resources to the limit, and further revisions may not assuage WBD’s core concerns. Industry insiders speculate that without a major financial backer beyond the Ellison guarantee—or a complete restructuring of the offer—Paramount’s window is closing fast. Still, in Hollywood, surprises are never off the table.
Why This Matters Beyond Wall Street
This isn’t just a finance story—it’s about who gets to shape the future of entertainment. Will iconic characters and worlds be stewarded by a debt-pressed traditional studio, or a global streaming titan with deep pockets and algorithmic precision? The outcome will influence everything from greenlight decisions to global distribution strategies for years to come.
A Defining Moment for Media’s Future
As WBD shareholders weigh their options, the entertainment world watches closely. In rejecting Paramount’s bid—not once, but twice—Warner Bros. Discovery has made a bold statement: in the new media era, stability, strategy, and sustainability outweigh even the shiniest all-cash offers. The real winner may not be a company, but the audiences who depend on these storied franchises to endure—not just survive, but thrive—in a rapidly evolving landscape.
