The Warner Bros. Discovery merger soap opera took another turn on Wednesday after the company rejected Paramount’s bid for an eighth time.
Despite Larry Ellison making a personal guarantee in his son David’s quest for all of Warner Bros. Discovery, the company’s board unanimously determined that Paramount’s latest bid still offers “insufficient value” and “significant costs, risks and uncertainties.”
While acknowledging that the elder Ellison “stepped up to the table” with a personal guarantee, WBD’s latest concerns include fears that the revised offer’s $55 billion in debt financing would heighten the risk of its failure to close. The company’s board also said that accepting Paramount’s offer could result in $4.7 billion, or $1.79 per share, in total costs and other operating and debt refinancing restrictions that could damage WBD’s business.
It’s the latest development in a saga that has a potentially seismic impact on the entertainment industry — no matter how it ends up. But it also happened on a busy day with a Congressional hearing looking into the impact of WBD’s deal with Netflix and chatter from a major Warner Bros. shareholder. Sharp investors, meanwhile, are keeping an eye on Comcast spinoff Versant, seen as a proxy for how much WBD’s own spinoff, Discovery Global, may be worth when it undergoes its own separation later this year. Versant’s stock price plunged in its Nasdaq debut on Monday, and fell further to $33.27 as of Wednesday’s close.
There’s a lot to keep track of, so here are the highlights:
Paramount holds firm at $30 per share
On Thursday, Paramount held firm at its $30 per share offer despite the rejection of its latest revised bid. Though it has previously said that $30 per share is not its “best and final” offer, the media giant has thus far stuck to its guns and has instead taken its bid directly to shareholders.
The Ellisons are giving WBD shareholders until Jan. 21 at 5 p.m. ET to tender their shares, though that deadline can be extended. As of Dec. 19, less than 400,000 shares had been validly tendered and not withdrawn, though shareholders can do so at any time before the deadline. WBD has approximately 2.48 billion outstanding shares.
Pentwater Capital Management, which is WBD’s seventh largest shareholder, has penned a letter accusing the board of not fully engaging with Paramount’s latest bid, which it believes is “economically superior.” It also expressed concern that the latest rejection looks like the board is “digging into their pocket to come up with something brand new, moving the goal post.”
“We have the ability to vote for who represents us on the board of directors. We have the ability to vote for if we want the Netflix transaction or not,” Pentwater CEO Matt Halbower told CNBC. “We are a small voice, but I think it’s important for the board to at least hear our voice as the seventh largest shareholder, because I think what they’re doing is wrong. If Paramount goes away, then it is a lost opportunity.”
In a separate interview with CNBC, WBD board chairman Samuel DiPiazza Jr. pushed back against that claim, arguing the company is “very open” to a deal with Paramount, but emphasized that they’ve “got to put something on the table that is compelling and is superior.”
“For Paramount to win, it not only needs to raise its bid substantially above $30/share, it also needs to change the composition of its bid to absorb the billions of costs associated with abandoning the Netflix bid and shift the financing from mostly debt to mostly cash,” Lightshed Partners analyst Rich Greenfield said. ”Not to mention, the far larger amount of cash needed would have to come from sources that do not create potential regulatory risks.”
At the same time, the WBD board has expressed concern that Paramount Skydance is a “litigious counterparty,” with a New York Post report suggesting that Paramount could consider abandoning its bid and suing over the sale process.
“It would be a long shot that they would be able to win a suit claiming an unfair sale process,” Third Bridge senior analyst John Conca told TheWrap. “If Paramount were to pull its bid and opt to sue, I would view that as almost admitting defeat.”
Democrats express concern at Congressional hearing
While Ellison holds firm and continues to pursue Paramount’s tender offer, Warner and Netflix are moving forward with their $83 billion deal, submitting a Hart-Scott-Rodino (HSR) filing and engaging with regulators, including the U.S. Department of Justice and European Commission.
The streamer expects its deal to close in the next 12 to 18 months and shareholders. Warner Bros. expects shareholders to vote on the deal in late spring or early summer.
At the same time, the House Judiciary Committee’s Subcommittee on Administrative State, Regulatory Reform and Antitrust held a Wednesday hearing to “start a much-needed conversation about whether further consolidation in the streaming industry would be helpful or harmful to consumers.”
“While I do not prejudge the merits of any proposed merger, I am concerned with any deal that would significantly increase the concentration in a market that is already highly concentrated,” the committee’s ranking member Jerry Nadler, a Democrat, said. “Such increased concentration could not only harm consumers. We have also heard great concern from the creative guilds, who have borne the brunt of decades of media consolidation that historically has been followed by fewer jobs, downward pressure on wages and reduced creative opportunities. That is why it is so important that any merger be reviewed with careful and impartial analysis by the antitrust regulators.”
During the hearing, a panel of three antitrust experts fielded questions about the implications and concerns of potential merger deals with both Netflix and Paramount, including potential job losses, reduced competition and an increase in prices.
The conversation also covered what antitrust regulators may look for in an antitrust review and the Trump administration’s politicization of antitrust policy, specifically as it pertains to merger reviews. The president has suggested he would be directly involved in the approval of any deal with Warner Bros. Discovery.
“Each new merger acts as a new opportunity for the president to enrich himself and his family and friends,” Rep. Jamie Raskin warned. “This is not antitrust law. This is a political and financial shakedown substituting for an antitrust merger review. It’s got nothing to do with antitrust law or consumer choice or lower prices. It is corruption.”
Versant spinoff draws Discovery Global comparison
All parties involved are also keeping a close eye on the trading of Comcast’s cable network spinoff Versant as they look to assess the potential value of Discovery Global, which is set to split from Warner Bros. in the third quarter of 2026.
The value of the cable networks has become a major sticking point in the fight, with Paramount valuing them between $0 and $0.50 per share, while WBD’s board has valued them between $3 and $5 per share.
Versant stock has fallen over 20% since its Nasdaq debut, closing at $33.27 on Wednesday. CNBC’s Alex Sherman has pointed out that the initial volatility could be coming from forced selling as a result of indexes rebalancing their portfolios. But a prolonged decline could potentially strengthen Ellison’s argument to WBD shareholders to tender their shares to Paramount Skydance.
“These initial trading sessions for Versant’s stock price have not been great and signal that there is not a lot of appetite for cable network assets. It’s not surprising given the industry is in decline,” S&P Global analyst Scott Robson told TheWrap. “This does make Paramount’s offer seem attractive for WBD as the combined cable network unit of Paramount and WBD would be able to buoy declining profits in the space via cost synergies. Discovery Global would have more debt than Versant and more lower-performing networks which could be less appealing to investors.”
In Thursday’s letter, Paramount said Versant “illustrates the challenged path ahead for Discovery Global” and said it believes Discovery Global will trade at a discount to Versant because it will likely be “significantly more leveraged” and has a “less attractive portfolio.”
But DiPiazza Jr. pushed back, arguing that Discovery Global’s business has greater scale and profitability than Versant. While acknowledging that it would have a lot of debt, he noted it can be discounted and bought back.
“It has more cash flow. It is a different company,” DiPiazza Jr. added. “Now, what’s it worth? The market’s going to have to tell us.”
