Warner Bros rejects Paramount Skydance’s $108bn bid, accuses rival of misleading investors

Warner Bros Discovery’s board has formally rejected Paramount Skydance’s $108.4bn hostile takeover bid, accusing the rival studio of misleading shareholders about how solid its financing really is.

In a sharply worded letter to shareholders released on Wednesday, Warner Bros said Paramount had “consistently misled” investors by claiming its $30-per-share cash offer was fully guaranteed by the Ellison family, led by Oracle cofounder Larry Ellison and his son David, who runs Paramount Skydance.

“It does not, and never has,” the board wrote, saying the offer carried “numerous, significant risks” and fell well short of the certainty provided by Netflix’s competing bid.

Warner Bros is currently at the centre of a high-stakes bidding war for control of its film and television studios, the HBO Max streaming service and blockbuster franchises such as Harry Potter. After the company accepted Netflix’s $27.75-per-share offer, Paramount launched a hostile bid to outflank the streaming giant.

The board said Netflix’s proposal is superior because it is a binding agreement with no equity financing contingencies and firm debt commitments. By contrast, Paramount’s offer could be withdrawn or amended at any time before completion, the board noted.

Warner Bros chairman Samuel Di Piazza said a shareholder vote is expected in the spring or early summer, though no date has been set.

Paramount and the Ellison family have suggested their ties to US President Donald Trump would smooth the deal’s regulatory path. Warner Bros made no reference to that claim in its letter.

“The Warner Bros Discovery Board reinforced that Netflix’s merger agreement is superior and that our acquisition is in the best interest of stockholders,” Netflix co-CEO Ted Sarandos said in a statement.

Netflix has already begun discussions with US and European regulators, with co-CEO Greg Peters telling CNBC the company is confident about regulatory approval. Netflix has also indicated it would continue releasing Warner Bros films in cinemas, aiming to ease concerns about reduced competition in theatrical distribution.

Paramount last week appealed directly to Warner Bros shareholders, arguing it had “air-tight financing”, including $41bn in new equity from the Ellison family and RedBird Capital, plus $54bn in debt commitments from Bank of America, Citi and Apollo.

But Warner Bros pushed back, saying the equity commitment relied not on a direct Ellison family backstop but on an “unknown and opaque” Lawrence J Ellison Revocable Trust, a structure whose assets, liabilities and commitments can change at any time.

“A revocable trust is no replacement for a secured commitment by a controlling shareholder,” the board wrote.

The rejection came just a day after Affinity Partners, a fund backed by Trump’s son-in-law Jared Kushner and one of the financing sources for Paramount’s bid, withdrew from the deal. Paramount did not disclose how much Affinity had planned to invest.

“With two strong competitors vying to secure the future of this unique American asset, Affinity has decided no longer to pursue the opportunity,” the firm said.

Warner Bros also questioned Paramount’s broader financial stability, noting the bid depended on a complex, seven-party structure with cross-conditions and a cap on the Ellison trust’s liability.

Market reaction was swift. Paramount Skydance shares fell 3.8 percent, Warner Bros Discovery slipped 0.4 percent, while Netflix surged 2.8 percent as investors appeared to back the streaming giant’s bid.