Warner Bros. Discovery Inc. (WBD) is preparing to recommend that its shareholders reject a $108 billion hostile takeover offer from Paramount Global, according to a Financial Times report. The WBD board, led by CEO David Zaslav, is expected to announce its position as soon as Wednesday after several days of deliberations.
The board's filing is anticipated to outline four key objections to Paramount's bid: concerns over valuation, funding commitments, regulatory risk, and deal structure. A primary focus is on the financial backing from Oracle co-founder Larry Ellison. The current financing plan relies on the Ellison family trust, which is largely funded through Oracle stock, rather than Ellison's direct personal wealth. WBD directors have questioned the strength of these assurances.
Paramount, run by David Ellison, made its $30-per-share all-cash tender offer directly to WBD investors last week after losing a separate contest for the studio and streaming assets to Netflix. In contrast, Netflix's $83 billion offer for WBD's film and streaming assets, struck earlier this month, is viewed by WBD executives and investors as more credible and better structured. Netflix's proposal valued WBD at $23.25 in cash and $4.50 in stock and included an unusually high $5.8 billion termination fee, signaling confidence in regulatory approval.
Paramount has countered that Netflix's bid faces greater antitrust scrutiny due to its dominant market position. David Ellison has stated his group remains willing to negotiate and potentially increase its offer if WBD engages further.
Another area of scrutiny for WBD is the composition of Paramount's financing. More than $24 billion of the funding tied to Paramount's proposal originates from sovereign wealth funds in Qatar, Saudi Arabia, and Abu Dhabi—roughly double the amount the Ellisons are committing. WBD's advisors believe this could trigger additional regulatory review.
The forthcoming WBD filing will underscore its confidence in Netflix's approach while stressing openness to new terms from Paramount if financing concerns are resolved. Shares in Warner Bros. Discovery rose nearly 1% to around $29 on Tuesday, indicating investor expectations that Paramount may need to raise its offer to stay in the contest.
