Battle for Media Giant Warner Bros. Discovery Intensifies as Board Rejects Hostile Bid

Warner Bros. Discovery (A) US9344231041

The future ownership of media conglomerate Warner Bros. Discovery is at the center of a fierce corporate contest. In a decisive move, the company’s board of directors has formally advised shareholders to reject an unsolicited takeover proposal from Paramount Skydance. This recommendation throws investor support behind a previously agreed strategic merger with streaming leader Netflix, forcing stakeholders to choose between two distinct paths forward.

Directors at Warner Bros. Discovery voted unanimously to oppose the hostile bid from Paramount Skydance. The unwelcome cash offer values each share at approximately $30, implying a total enterprise valuation near $108 billion. However, the board has characterized the proposal as both “unrealistic” and “inadequate.” Concerns were raised regarding the certainty of financing for the bid, which is backed in part by Oracle founder Larry Ellison. Furthermore, the board warned that completing such a transaction could face regulatory hurdles, potentially delaying closure for 12 to 18 months.

A Clash of Strategic Visions

The core of the conflict lies in two fundamentally different strategies. The board is advocating for the execution of its already negotiated pact with Netflix. This arrangement values Warner Bros. Discovery equity at about $27.75 per share. The consideration consists of a $23.25 cash component plus Netflix stock valued at roughly $4.50 per share. While this figure is nominally lower than the all-cash alternative, directors emphasize the “superior and more secure value” in creating a combined media powerhouse through this strategic fusion.

For the investment community, the calculus is more complex. The rejection of a higher immediate cash payout has generated discontent among certain shareholders who prioritize liquidity. A significant impediment to accepting the Paramount bid is a substantial $2.8 billion breakup fee payable to Netflix if the existing deal collapses. The board contends that the Paramount Skydance offer fails to account for this penalty, which would directly erode shareholder value.

Market Pricing Reflects Investor Uncertainty

Current share trading activity mirrors the prevailing market doubt. The stock is presently quoted at a level between the two competing offer prices. Its failure to reach Paramount’s $30 per-share benchmark indicates skepticism about the hostile bid’s prospects. Conversely, it trades above the implied value of the Netflix transaction, fueled by speculation that Paramount may improve its terms or that a shareholder revolt could unfold.

The coming weeks are critical. Paramount Skydance must decide whether to enhance its proposal or provide more concrete financing assurances. If it cannot, the path will likely be cleared for the Netflix merger—provided shareholders ultimately heed their board’s guidance.