Warner Bros. Discovery Rejects Hostile Bid From Paramount Skydance

The ongoing battle for the acquisition of Warner Bros. Discovery continues. As previously reported, WBD, the broadcast and streaming partner of All Elite Wrestling (AEW), had accepted a bid from Netflix to acquire much of WBD’s assets, including Warner Bros. Pictures and HBO Max. However, that led to the David Ellison-led Paramount Skydance staging a hostile bid too WBD.

At the time, Paramount extended an all-cash $30 per share offer directly to WBD shareholders. The deal included all of WBD, including the television networks, which Netflix is not seeking to acquire. Per the latest update from The Hollywood Reporter, the official board of WBD rejected Ellison’s offer, informing shareholders that it’s still “inferior” to the one from Netflix.

Additionally, the WBD board informed shareholders that the hostile bid carries “numerous significant risks and costs on WBD.” Now, Paramount will have to attempt to persuade WBD shareholders to tender their shares at that price, or the entertainment entity will have to submit a higher bid than its current $108 billion offer to potentially shift the outcome of the potential Netflix acquisition.

In a statement from the WBD Board of Directors, Chair Samuel A. Di Piazza, Jr., stated, “Following a careful evaluation of Paramount’s recently launched tender offer, the Board concluded that the offer’s value is inadequate, with significant risks and costs imposed on our shareholders.” Di Piazza continued, “This offer once again fails to address key concerns that we have consistently communicated to Paramount throughout our extensive engagement and review of their six previous proposals. We are confident that our merger with Netflix represents superior, more certain value for our shareholders, and we look forward to delivering on the compelling benefits of our combination.”

THR notes that WBD’s rejection of the hostile bid was expected because the offer was said to be similar to the one Paramount submitted to WBD on Dec. 4, ahead of accepting the offer from Netflix. Additionally, WBD had concerns around the foreign financing of the deal, including whether Oracle founder Larry Ellison would fully backstop it, and WBD’s filing on Dec. 17 reinforced the entity’s concerns.

WBD also reportedly noted that the backstop from Larry Ellison’s revocable trust is not sufficient because the assets and liabilities aren’t disclosed, and assets within the trust can be moved or changed. The WBD board also suggested in its corporate filing that the Middle East sovereign funds carry risks, as Saudi Arabia’s Public Investment Fund is contributing $10 billion, Abu Dhabi is contributing $7 billion, and the Qatar Investment Authority is contributing $7 billion.

Concerns over the $1 billion to be contributed by Tencent later forced Paramount to remove the Chinese tech company from the last bid. As noted, Jared Kushner’s Affinity Partners contributed $200 million, and that fund also dropped out of the deal. WBD also noted that it does not believe there is a material difference from a regulatory standpoint between the Netflix and Paramount deals.

In terms of what’s next, THR reports that Ellison and the Paramount team were waiting to see WBD’s response before deciding on their next move. If Paramount decides to place a higher bid, then Netflix will have the chance to match it or respond with a counteroffer, kickstarting a new bidding war. Netflix also sent its own letter to shareholders on Dec. 17, arguing that Netflix’s deal “is the right deal, with the right partner, at the right time.”

THR reports that Ellison sent a text message to WBD CEO David Zaslav hours before the initial Netflix deal was made that Paramount was willing to go higher than $30 per share. Ellison wrote in his message, “Please note, importantly, we did not include ‘best and final’ in our bid.” THR also reports that Paramount released a statement today reaffirming its $30 per share tender offer.

Ellison also reportedly wrote in his statement, “We remain committed to bringing together two iconic Hollywood studios to create a unique global entertainment leader.” He continued, “Our proposal clearly offers WBD shareholders superior value and certainty, a clear path to close, and does not leave them with a heavily indebted sub-scale linear business. I have been encouraged by the feedback we have received from WBD shareholders who clearly understand the benefits of our offer. We will continue to move forward to deliver this transaction, which is in the best interest of WBD shareholders, consumers, and the creative industries.”

Ellison and some of his top deputies continued pitching Wall Street shareholders on the deal last week during a UBS conference in New York. THR reports that one of the attendees of the meetings said that they were left with the impression that Ellison is ready to make an even higher bid and wondered if Netflix could match a higher bid with the trajectory of its stock price this week after announcing the $83 billion deal.

THR also notes that Paramount’s all-cash bid is appealing to significant WBD shareholders. In the event of Paramount raising its offer again, pressure from Wall Street might rise for the corporation to reconsider Paramount’s offer.

The Status of AEW and Warner Bros. Discovery Amid Acquisition Talks & Negotiations

The ongoing acquisition battle is not expected to affect Warner Bros. Discovery’s relationship with AEW for the time being. As previously noted, AEW’s deal with WBD runs through 2027, with an option to extend the deal to 2028 if desired.

When that happens, AEW’s contract would presumably be with both WBD and Discovery Global. WBD would handle streaming, while Discovery Global would hold the contract for the network broadcasts.

Additionally, if the Netflix deal moves forward, WBD would likely continue with its plans to spin out its TV networks into Discovery Global in the back half of 2026. If that happens, WBD would likely continue to handle AEW’s streaming on HBO Max, with Discovery Global handling AEW’s TV contracts.

It’s also been reported that sources believe the Discovery Global would plan a Turner Sports subscription platform if and when that potential split happens. However, it’s rumored by the Wrestling Observer Newsletter that the belief in AEW is that AEW would stay on HBO Max and not go onto the new streaming service.