The board of Warner Bros. Discovery has rebuffed a nearly $108 billion unsolicited offer from David Ellison’s Paramount Skydance, dismissing the bid as illusory and saying it did not have the financing certainty needed for a deal of this size. The company reiterated a commitment to a signed merger agreement with Netflix worth $27.75 a share for WBD’s studios and streaming assets that the board called “binding and fully financed.”
Why WBD Says the Paramount Bid Isn’t Good Enough
In a letter to shareholders, WBD accused Paramount of misrepresenting the depth of its financing, in particular describing claims that the Ellison family would offer a full backstop for the tender offer.
WBD’s board said the proposal depended on equity commitments that are not firm, meaning the total financing package is up in the air and execution risk would be unacceptable.
Boards typically prefer to demand “certain funds” for hostile takeovers — money that is committed when a deal is signed and cannot be taken away. WBD says the Paramount Skydance model doesn’t have that, and would instead bring timing risks that could expose shareholders if credit conditions change or equity backers hesitate.
WBD Says Netflix Deal Offers Higher Certainty
“In contrast, our Netflix contract has enforceable clauses and no need for incremental equity with a strong debt fund already in place,” WBD said. The focus on deal certainty is a reliable indicator of what the board cares most about: minimizing closing risk and accelerating the path to cash for early stockholders. Netflix co-CEO Ted Sarandos cheered the ruling, noting that WBD’s analysis “confirms that the agreement we signed delivers superior value and is the right choice for stockholders.”
The two-step comparison — hostile tender offer versus signed merger — hinges as much now on the odds of execution as headline price. Academic studies and banker playbooks alike observe that higher nominal bids often come unstuck when financing is squishy, or regulatory timelines stretch, destroying value through delay-related decay; concessions or a failed close to follow.
The Backstop Dispute and Ellison’s Involvement
The consortium from Paramount Skydance has investors who are tied to David Ellison, with an expectation that his father, Larry Ellison, would foot key parts of the funding. The board of WBD disputes that there is a sweeping backstop, shining the spotlight on what capital is absolutely hard-committed versus potentially contemplated. According to Variety, the Ellison-linked group will look at the rejection and determine whether or not to up its bid or change the terms of the proposal.
Backstop mechanics matter. In hostile takeovers, a credible backstop can keep financing on an even keel and assure sellers that shortfalls in demand or market choppiness won’t derail closing. In its absence, lenders and rating agencies have little choice but to overprice risk. S&P Global Ratings and Moody’s have often warned that high leverage or conditional financing can imperil a company’s credit profile when strategic deals are up in the air.
Strategic Stakes for a Remaking Media Industry
The standoff is part of a larger consolidation wave that is transforming Hollywood and streaming. WBD has spent the last two years reducing costs, combining operations and chipping at a debt burden topping $40 billion when formed. Meanwhile, the industry is trading pure subscriber growth for profitability — forcing companies to exchange scale for steady cash flow, rationalize portfolios and exit from non-core assets.
A Netflix union would recode competitive dynamics overnight by combining one of the largest global streaming platforms with a deep library and production engine. Any alternative that involves Paramount Skydance, particularly if it were pursued in a hostile manner, would raise its own set of questions about integration and regulation — from content licensing and exclusivity to sports rights and distribution contracts.
Regulators in recent years have raised the bar on big media and tech deals, with a focus on vertical and horizontal overlaps as well as their effects on labor markets for creative forces. Recent results — from Amazon’s MGM purchase to the scuttling of the Adobe–Figma deal — also illustrate how funding certainty and regulatory clarity often decide what bids ultimately prevail, no matter headline valuations.
What Comes Next for Paramount Skydance and WBD
Paramount Skydance could come back with more solid assurances, an explicit backstop, and clearer parameters on debt and equity to challenge Netflix’s claim of certainty. It is also possible that, upon reflection, it might shift from confrontation to negotiation — a course of action that may reduce risk and protect the optionality for both parties.
For WBD shareholders, the important variables are still those of certainty of close, time to cash, and net value after fees and potential antitrust remedies. Watch for careful scrutiny of the fine print on financing letters, material adverse change clauses and any breakup fees alongside early signs from the FTC and DOJ around review timelines.
For now, until a better fully funded offer materializes, WBD’s board is playing for the present — more confident in taking a binding deal with cash locked in and a clear ladder to execution over a higher number that might not show up whole. In contested M&A, certainty is frequently the price of attraction.