Warner Bros. Discovery likely to reject Paramount's revised proposal

Warner Bros. Discovery Inc. is expected to again turn down a takeover proposal from Paramount Skydance Corp., despite changes made to the offer, according to media reports.

The WBD board has not made a final decision but is scheduled to meet next week to continue discussions. A major concern remains valuation. Paramount has not raised its bid, which the board had earlier viewed as less attractive than a competing proposal from Netflix Inc.

Paramount is owned by billionaire Larry Ellison and his son, David Ellison, a film producer. Since acquiring Paramount in August, the Ellisons have made several attempts to buy Warner Bros. Discovery. This deal would give Paramount control of this Hollywood studio and expand its streaming business.

Directors at Warner Bros. Discovery are reportedly unconvinced about the offer’s strategic or financial merits. Some investors believe talks are unlikely to move forward unless Paramount significantly improves its proposal.

The board is also examining risks associated with the deal structure. One concern is that a transaction led by Paramount could restrict WBD’s ability to manage its debt, leaving key financial decisions subject to approval by the Ellisons. Another issue is that Paramount has not agreed to cover a breakup fee the studio would owe Netflix if it withdrew from that deal.

With these issues unresolved, the board is expected to remain cautious, increasing the chances that Warner Bros. Discovery will again reject Paramount’s bid unless the terms are materially revised.