Warner Bros To Advise Shareholders Reject Paramount, Accept Netflix Offer: Report

Warner Bros. Discovery management plans to recommend shareholders reject Paramount Skydance’s takeover bid and instead uphold the existing agreement with Netflix, according to the Wall Street Journal, with a formal announcement possible as soon as Wednesday; the move shifts pressure onto Paramount CEO David Ellison to improve terms. Netflix’s proposal values the HBO Max streaming business and production lots at $27.75 per share via a cash-and-equity mix, while Paramount’s competing tender offers $30 cash per share for the whole company and expires Jan. 8, leaving room for a late enhancement; WBD shares slipped modestly on the report while Netflix and Paramount Skydance were largely flat.

Analysis

Warner Bros. Discovery management intends to advise shareholders to reject Paramount Skydance’s $30 cash-per-share takeover bid and instead uphold the existing agreement with Netflix, with a formal recommendation reported by the Wall Street Journal as possible as early as Wednesday. Netflix’s proposal is valued at $27.75 per share and is structured as a cash-and-equity transaction specifically for the HBO Max streaming arm and production lots, while Paramount’s $30 is an offer for the entire enterprise and its tender offer expires Jan. 8. The competing structures create a tradeoff between the certainty and scope of the transactions: Netflix’s bid is asset-specific and mixed consideration, Paramount’s is a higher all-cash headline price but may be improved only at or before the Jan. 8 deadline. Market reaction was muted but negative for WBD (shares down slightly) with NFLX and PSKY largely flat; management’s public recommendation shifts strategic and reputational pressure to Paramount’s CEO and raises the probability that the Netflix path, not a full takeover, is the near-term outcome, while leaving the door open for a late, higher bid.

Key Decisions for Investors

• Await Warner Bros. Discovery’s formal recommendation and examine the Netflix agreement’s definitive terms before changing WBD exposure, as management is urging shareholders to stick with that deal
• Monitor Paramount Skydance’s actions through the Jan. 8 tender expiry for any improved or revised offer — reassess positions if a higher, credible all-cash bid emerges
• If you hold WBD, decide whether you prefer the relative certainty of the Netflix asset-sale consideration versus the potential premium of a full-company cash bid and size positions accordingly
• Consider short-duration hedges or reducing position size ahead of the formal announcement and the Jan. 8 deadline to limit downside from further negative sentiment or deal uncertainty