Warner Bros. Discovery’s (WBD) board of directors has unanimously recommended that shareholders reject Paramount Skydance’s amended tender offer, reaffirming its support for the company’s previously announced merger with Netflix.
In a statement released Tuesday, the WBD board said Paramount Skydance’s proposal, most recently revised on December 22, 2025, fails to meet the standard of a “Superior Proposal” under Warner Bros. Discovery’s merger agreement with Netflix and is not in the best interests of shareholders.
The board cited multiple concerns, including lower overall value, heightened execution risk, and significant financial exposure if the Paramount Skydance transaction were to collapse. By contrast, the Netflix deal, announced December 5, 2025, offers greater certainty and stronger shareholder protections, according to the company.
Samuel A. Di Piazza Jr., chair of the Warner Bros. Discovery board, said the Paramount Skydance offer relies on an “extraordinary level of debt financing” that introduces substantial risk and lacks meaningful safeguards if the transaction fails to close. He added that the Netflix agreement delivers superior value with far greater confidence of completion.
Under the Netflix merger, WBD shareholders are slated to receive $23.25 in cash plus Netflix stock valued at approximately $4.50 per share at closing. Shareholders would also retain ownership in Discovery Global, which the board said would have the scale and flexibility to pursue independent growth opportunities.
The board also detailed the financial penalties Warner Bros. Discovery would incur if it abandoned the Netflix agreement to pursue the Paramount Skydance deal. These include a $2.8 billion termination fee payable to Netflix, a $1.5 billion penalty tied to debt exchange obligations, and roughly $350 million in additional interest expenses. In total, those costs would amount to approximately $4.7 billion, significantly eroding the value of Paramount Skydance’s proposed regulatory termination fee.
The board further emphasized the risk inherent in Paramount Skydance’s proposed financing structure, describing the transaction as a leveraged buyout that would be the largest of its kind to date. Paramount Skydance would need to secure nearly $95 billion in debt and equity financing, a figure far exceeding its current market capitalization. The board warned that shifts in market conditions, lender sentiment, or business performance could jeopardize the deal over its estimated 12- to 18-month closing window.
In contrast, Netflix was described as having a strong balance sheet, investment-grade credit ratings, and projected free cash flow exceeding $12 billion in 2026, significantly reducing the risk of non-completion.
The board also cautioned that if the Paramount Skydance offer were to fail, WBD shareholders could be left with a weakened company after months of restrictive operating covenants that could hinder strategic initiatives, debt refinancing, and talent retention.
“After extensive engagement and repeated feedback, Paramount Skydance has continued to submit proposals that fall short of addressing these concerns,” the board said. “The Netflix merger remains clearly superior.”
Financial advisors Allen & Company, J.P. Morgan, and Evercore are advising Warner Bros. Discovery, with legal counsel provided by Wachtell, Lipton, Rosen & Katz and Debevoise & Plimpton.
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WBD Board urges shareholders to reject Paramount offer
