Warner Bros. Discovery’s (WBD) board of directors has unanimously recommended that shareholders reject the tender offer launched by Paramount Skydance, reaffirming its support for the company’s pending merger with Netflix, which the board says delivers “superior, more certain value” with significantly less risk.
In a statement released December 17, the board said Paramount Skydance’s proposal fails to qualify as a “Superior Proposal” under the terms of Warner Bros. Discovery’s merger agreement with Netflix and carries unacceptable financial, regulatory, and execution risks.
“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,” said Samuel A. Di Piazza Jr., chair of the Warner Bros. Discovery board. He added that the Paramount Skydance bid “once again fails to address key concerns that we have consistently communicated” after six prior proposals.
In a detailed letter sent directly to shareholders, the board emphasized that its review process was “full, fair and transparent,” involving months of discussions with multiple bidders, including repeated engagements with Paramount Skydance and the Ellison family. Despite those discussions, the board said Paramount Skydance never submitted a proposal superior to Netflix’s binding merger agreement.
The board highlighted that the Netflix deal provides Warner Bros. Discovery shareholders with $23.25 in cash, $4.50 in Netflix stock, and additional upside through the planned separation of Discovery Global. By contrast, the Paramount Skydance offer was described as “illusory” and “non-binding,” with terms that could be amended or withdrawn at any time before closing.
A major concern cited by the board is the need for financing certainty. The letter states that Paramount Skydance has not secured a full equity backstop from the Ellison family, despite public claims to the contrary. Instead, the offer relies on an “opaque revocable trust,” which the board says contains “gaps, loopholes and limitations” that expose shareholders to significant downside risk.
“PSKY has consistently misled WBD shareholders that its proposed transaction has a ‘full backstop’ from the Ellison family. It does not, and never has,” the board wrote, noting that damages tied to a failed transaction would be capped at just 7% of the trust’s commitment.
The board also rejected claims that the Paramount Skydance deal would face lower regulatory risk than the Netflix merger, stating that both transactions are capable of securing necessary approvals and that Netflix’s agreement includes a larger regulatory termination fee of $5.8 billion.
Ultimately, the board urged shareholders not to tender their shares, reiterating its belief that the Netflix merger represents the most reliable path forward. “We are confident that our merger with Netflix represents superior, more certain value for our shareholders,” Di Piazza said, “and we look forward to delivering on the compelling benefits of our combination”
The Warner Bros. Discovery–Netflix deal was announced earlier this month and remains subject to shareholder and regulatory approval.
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