Battle for Warner Bros. Discovery Intensifies as Paramount Makes Hostile Bid

Warner Bros. Discovery (A) US9344231041

The contest for control of Warner Bros. Discovery has escalated dramatically following a hostile takeover bid from Paramount. The move, structured as an all-cash proposal and backed by a substantial personal guarantee from billionaire Larry Ellison, aims to address financing concerns and place the decision directly in shareholders' hands. The investor community is divided, setting the stage for a pivotal showdown between Paramount's offer and a pre-existing agreement with Netflix.

Paramount has presented a tender offer of $30 per share in cash, valuing the media conglomerate at approximately $108.4 billion. A critical component of the bid is the personal equity guarantee of $40.4 billion provided by Oracle co-founder Larry Ellison. This strategic move is designed to directly counter the Warner Bros. Discovery board's primary objection regarding financing uncertainty. The offer period has been extended, with a deadline now set for January 21, 2026.

By formally securing the funding, Paramount has strengthened its position and compelled institutional investors to give the proposal serious consideration. The Ellison guarantee removes a significant hurdle, transforming the bid from a theoretical possibility into a concrete alternative.

Competing Vision from Netflix and Shareholder Dissent

Prior to Paramount's intervention, Netflix had reached an agreement to acquire the streaming and studio division of Warner Bros. Discovery—including assets such as HBO, Max, and Warner Bros. Studio—for $82.7 billion. CEO David Zaslav and the board have endorsed this "friendly" transaction, arguing it promises greater long-term value creation despite a lower immediate cash component. Under this scenario, the company's legacy linear TV networks would be spun off into a separate entity.

However, several major investors, including Harris Oakmark, have publicly criticized the $30-per-share Paramount offer as "inadequate." Warner Bros. Discovery stock closed at $28.80 on Friday, reflecting a year-to-date gain of roughly 177%. This substantial share price appreciation has increased pressure on Paramount to potentially enhance its bid if it hopes to win sufficient support from institutional voters.

Market observers are now closely watching to see if Paramount will raise its offer. The combination of public criticism from key shareholders and the solid financial backing from Ellison has increased speculation that a revised, higher bid may be forthcoming.

The Binary Choice Facing Investors

Shareholders are essentially faced with two distinct outcomes:
1. Acceptance of the Paramount Bid: This path offers a swift cash payout of at least $30 per share, with the possibility of a higher amount if the offer is improved.
2. Execution of the Netflix Agreement: This results in a more complex transaction involving a mix of cash, Netflix stock, and shares in a newly spun-off television company.

The final decision will hinge on the votes of institutional investors and the number of shares tendered to Paramount's offer. With the deadline over a year away on January 21, 2026, the coming weeks are likely to see significant volatility. The ultimate resolution will be determined by Paramount's willingness to increase its price and shareholders' risk assessment regarding the more intricate Netflix deal structure.