Warner Bros. Discovery is preparing to urge shareholders to reject Paramount Skydance’s hostile takeover bid, citing concerns over financing, deal certainty and restrictive terms, people familiar with the matter said.
After reviewing the proposal, Warner Bros.’ board plans to recommend against accepting Paramount’s tender offer, arguing that the company’s existing deal with Netflix provides greater value, clarity, and flexibility.
A formal response to Paramount’s offer could be filed as early as Wednesday, though no final decision has been taken and discussions remain ongoing.
A key sticking point is the structure of Paramount’s financing. The bid is backed by equity from a trust managing the wealth of Larry Ellison, father of Skydance chief David Ellison. Because the trust is revocable, Warner Bros. fears assets could be withdrawn at any time, potentially leaving the company with limited recourse.
Concerns intensified on Tuesday after one of Paramount’s backers, Affinity Partners — led by Jared Kushner — announced it was withdrawing from the deal, citing the presence of “two strong competitors.” The same day, US President Donald Trump criticised Paramount’s CBS division on social media, claiming it had treated him “far worse” since the Ellison family took control earlier this year.
Warner Bros.’ board is also uneasy about the operational uncertainty the company could face during what may be a lengthy regulatory approval process. According to sources, Paramount’s proposal does not offer sufficient flexibility for Warner Bros. to run its business or manage its balance sheet during that period.
Paramount has said it addressed some of these concerns, including refinancing flexibility and payment of a $5 billion breakup fee backed by the Ellison family. It has also modified financing plans, with about $1 billion from China’s Tencent Holdings withdrawn due to potential US national security concerns.
Earlier this month, Warner Bros. agreed to sell its studios, streaming business and HBO to Netflix for $27.75 a share, valuing the deal at about $83 billion including debt. The company also plans to spin off its cable networks, including CNN and TNT, to shareholders before that transaction closes.
Paramount, which owns MTV and Paramount+, has offered $30 a share — valuing Warner Bros. at more than $108 billion including debt — and has indicated the bid is not its “best and final” offer. Warner Bros. shares closed at $28.90 in New York, suggesting investors may still expect a higher bid.
Under its agreement with Netflix, Warner Bros. cannot solicit rival offers but may consider unsolicited proposals. If a superior offer emerges, Netflix has the right to match it to preserve the existing deal.