Warner Bros. Discovery, Inc. (NASDAQ:WBD) on Wednesday urged shareholders to reject Paramount Skydance Corp.’s (NASDAQ:PSKY) tender offer, saying the bid is inferior to WBD’s signed merger agreement with Netflix (NASDAQ:NFLX).
The WBD board unanimously concluded the PSKY offer, launched Dec. 8, 2025, is not in shareholders’ best interests and does not qualify as a “Superior Proposal” under WBD’s merger agreement with Netflix, which was signed Dec. 4 and announced Dec. 5.
In a letter to investors, the board stated that it initiated a public review of strategic alternatives in October and engaged with multiple parties.
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The process culminated in the Netflix agreement after what it described as a competitive review with independent financial and legal advisors.
The board reiterated its support for the Netflix transaction and advised shareholders not to tender shares into the PSKY offer. Board Chair Samuel A. Di Piazza Jr. said the bid provides inadequate value and would impose significant risks and costs on shareholders.
Under the Netflix deal, WBD shareholders are set to receive $23.25 per share in cash and $4.50 per share in Netflix stock, subject to a price collar. The board also cited additional value tied to the planned separation of Discovery Global and potential upside following that transaction.
Financing And Execution Risks Highlighted
The board challenged PSKY’s financing claims, saying the Ellison family has not provided an equity backstop. It said the offer relies on a revocable trust with undisclosed assets and liabilities that can change, creating uncertainty and downside risk.
The letter also cited capped damages tied to the trust arrangement, including in a scenario of willful breach. By contrast, the board described the Netflix agreement as binding, fully financed, and supported by a public company with an investment-grade balance sheet.
Termination Fees And Deal Certainty
The board warned that abandoning the Netflix deal could trigger substantial costs, including a $2.8 billion termination fee and about $1.5 billion in financing costs, totaling roughly $4.3 billion, or about $1.66 per share, if the PSKY offer fails to close.
It also stated that the PSKY tender offer is non-binding and can be amended or terminated, while still requiring global regulatory approvals that could take 12 to 18 months, thereby extending uncertainty for shareholders.
Regarding regulation, the board stated that advisers found no material difference in regulatory risk between the PSKY offer and the Netflix deal.
It highlighted Netflix’s $5.8 billion regulatory termination cash fee as support for deal certainty and urged shareholders to review WBD’s Schedule 14D-9 filing for additional details.
Netflix’s Response
Netflix separately welcomed the WBD board’s recommendation and urged WBD shareholders to approve the merger. Netflix said the fully negotiated cash-and-stock deal values WBD at $27.75 per share, with an enterprise value of approximately $82.7 billion, plus incremental value from the planned separation of Discovery Global in the third quarter of 2026.
Netflix co-CEOs Ted Sarandos and Greg Peters stated that the company anticipates closing within 12 to 18 months, subject to regulatory approvals, and cited the $5.8 billion reverse termination fee as evidence of confidence in the closing.
Price Action: Warner Bros. Discovery shares were down 1.12% at $28.57 at the time of publication on Wednesday, according to Benzinga Pro data. Paramount Skydance fell 2.82%, while Netflix rose 1.52%.
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