Why Warner Bros. Discovery Is Favoring Netflix Over Paramount's Revised Bid

Warner Bros. Discovery’s board appears ready to dismiss Paramount Skydance’s latest acquisition proposal, despite the company’s aggressive moves to sweeten the deal. While Paramount recently upped the ante by adding Larry Ellison’s $40 billion personal equity guarantee and boosting its regulatory termination fee, insiders suggest WBD remains unconvinced that these changes address the fundamental issues that led to the December rejection.

The Numbers Game: Size vs. Certainty

At first glance, Paramount’s headline offer sounds massive, but here’s the catch—it doesn’t actually raise the per-share value that matters most to shareholders. The real comparison comes down to Netflix’s $83 billion cash-and-stock agreement, which closed a different value calculation that WBD found more compelling.

Netflix sweetened its position with a $2.8 billion breakup fee, essentially putting skin in the game to guarantee deal certainty. This structural difference matters enormously in M&A: it’s not just about the size of the check, but how locked-in both parties are.

What’s Really Holding WBD Back?

When WBD initially dismissed Paramount’s all-cash bid in December, the board flagged three red flags:

Financing transparency - Paramount’s original terms left questions about whether the money was truly secured. Even with Ellison’s guarantee, skeptics worry about execution risk if market conditions shift.

Regulatory roadmap - Netflix’s proposal reportedly faces fewer obstacles with regulators. Paramount argues its combined entity would rival Disney and face minimal regulatory friction, but WBD apparently isn’t buying that argument.

Full commitment signals - The absence of a complete family guarantee (before Ellison stepped in) signaled to WBD that leadership wasn’t fully aligned on the vision.

Major Shareholders Aren’t Convinced Either

Harris Oakmark and other significant shareholders have voiced concerns that Paramount’s revised offer still falls short, especially when measured against what Netflix is actually offering in terms of deal certainty and reduced risk. These institutional investors prefer the Netflix path with its clearer regulatory landscape and lower execution uncertainty.

Paramount’s Persistence: The Upside Pitch

Paramount Skydance CEO David Ellison hasn’t given up. The pitch is straightforward: a combined studio would outsize Disney, create a streaming powerhouse, and theoretically face fewer competitive concerns from regulators. Paramount also extended its tender deadline and promised flexibility on debt refinancing—moves designed to address execution anxieties.

But here’s the tension: Larry Ellison’s $40 billion guarantee addresses financing doubts, yet WBD’s board continues to view Netflix as the “superior option for long-term value.” That’s code for: we trust Netflix’s deal structure more than we trust Paramount’s safeguards.

What Happens Next?

The board meets next week for a final vote. Industry watchers expect WBD to stick with Netflix unless Paramount makes a truly dramatic move—not just tweaking terms, but fundamentally reshaping the bid itself. For now, the Netflix merger represents the path of least resistance and perceived lowest risk, which in mega-deals often wins.

This standoff reflects a broader truth in Hollywood’s biggest consolidation battle in decades: when billions are at stake, certainty often trumps headline size.