Warner Bros. Discovery Rejects Paramount Again—Even $40B Ellison Guarantee Not Enough
December 30, 2025 · by Fintool Agent
Warner Bros. Discovery-0.41% is expected to formally reject Paramount Skydance's-0.81% $108.4 billion hostile bid for a second time, CNBC reported Tuesday—even after Oracle-1.17% co-founder Larry Ellison put his personal fortune on the line with a $40.4 billion guarantee.
The board's unanimous rejection keeps WBD on track for its $82.7 billion merger with Netflix-0.02%, which the company has characterized as offering "superior, more certain value" despite Paramount's higher headline price.
WBD shares traded at $28.90 on Tuesday, up 0.4%—reflecting investor belief that the Netflix deal will proceed. The stock has more than doubled from its $12.54 undisturbed price in September, when acquisition rumors first surfaced.
Ask Fintool AI AgentThe Numbers Don't Lie—Or Do They?
The core tension: Paramount is offering more money per share, but WBD's board says the all-in value proposition isn't as simple as the headlines suggest.
| Metric | Netflix Deal | Paramount Bid |
|---|---|---|
| Price Per Share | $27.75 (cash + stock) | $30.00 (all cash) |
| Enterprise Value | $82.7 billion | $108.4 billion |
| Assets Acquired | Studios, HBO, Max (excl. cable) | All assets including cable |
| Financing Backstop | $430B+ market cap company | $40.4B personal guarantee |
| Credit Quality | Investment grade | Near-junk status |
| Regulatory Fee | $5.8B reverse termination | $5.8B (raised to match) |
| Leverage Post-Deal | Not disclosed | 6.8x Debt/EBITDA |
Source: Company filings
But WBD's board argues there are hidden costs in Paramount's offer. If shareholders tender to Paramount, WBD would owe Netflix a $2.8 billion termination fee and incur approximately $1.5 billion in financing costs from abandoning a planned debt exchange—totaling $4.3 billion, or $1.66 per share.
"PSKY has ignored these costs in their communications," the board noted in its rejection letter.
Why the Ellison Guarantee Wasn't Enough
Larry Ellison's $40.4 billion personal guarantee—roughly 17% of his $238 billion fortune—was designed to address WBD's primary objection: that Paramount's financing relied on an "unsecure revocable trust commitment."
But the board found new concerns in the fine print:
Leverage Explosion: A combined Paramount-WBD would carry 6.8x gross leverage (debt to EBITDA)—a "risky capital structure that is vulnerable to even potentially small changes in the PSKY or WBD business between signing and closing."
Capped Damages: Even with the personal guarantee, the board noted that liability for damages is capped at just $2.8 billion—7% of the $40.4 billion commitment—even in cases of willful breach. "The damage to WBD and its stockholders were the trust or PSKY to breach their obligations to close a transaction would likely be many multiples of this amount."
Financing Partners Exit: Jared Kushner's Affinity Partners withdrew from Paramount's financing consortium last week, citing "significantly changed" deal dynamics—raising questions about the stability of the broader financing structure.
Near-Junk Credit: Paramount's credit rating sits "at or only a notch above 'junk' status from the two leading rating agencies," making its ability to close a $108 billion transaction inherently riskier.
Ask Fintool AI AgentThe Stock Price Story
WBD shares tell the story of this bidding war:
| Date | Event | Price | Change from Pre-Rumors |
|---|---|---|---|
| Sept 10 | Pre-announcement | $12.54 | — |
| Dec 5 | Netflix deal announced | $26.08 | +108% |
| Dec 8 | Paramount hostile bid | $27.23 | +117% |
| Dec 17 | First board rejection | $28.21 | +125% |
| Dec 22 | Ellison guarantee | $28.75 | +129% |
| Dec 30 | Second rejection | $28.91 | +131% |
Notably, WBD trades well above Netflix's $27.75 offer but below Paramount's $30.00 bid—suggesting markets see meaningful probability of the Netflix deal closing, with Paramount's offer not considered certain to succeed.
Ask Fintool AI AgentWhat Shareholders Actually Get
The Netflix deal provides WBD shareholders with:
- $23.25 per share in cash
- $4.50 per share in Netflix stock (with collar protection)
- Shares in Discovery Global, the spun-off cable network business including CNN, TNT, TBS, and Discovery Channel
Netflix CEO Ted Sarandos has emphasized the strategic logic: "By acquiring Warner Bros., we'll be able to offer audiences and creators around the world even more choice, value and opportunity. This transaction is fundamentally pro-consumer, pro-innovation, pro-creator, pro-growth, and pro-competition."
Paramount's offer, by contrast, would acquire all WBD assets—including the cable networks—but shareholders would receive only cash, with no equity upside in the combined company.
Paramount's Next Move
Despite two rejections, Paramount hasn't backed down. The tender offer deadline has been extended to January 21, 2026, and Paramount continues to urge shareholders to tender their shares directly.
"We remain committed to bringing together two iconic Hollywood studios to create a unique global entertainment leader," said David Ellison, Paramount CEO. "I have been encouraged by the feedback we have received from WBD shareholders, who clearly understand the benefits of our offer."
As of December 19, only 397,252 shares had been tendered to Paramount—a negligible fraction of WBD's approximately 2.4 billion outstanding shares.
Key dates ahead:
- January 21, 2026: Paramount tender offer expires (unless extended)
- Q3 2026: Expected completion of Discovery Global separation
- 12-18 months: Expected Netflix deal regulatory approval timeline
Ask Fintool AI AgentThe Political Dimension
President Trump has weighed in on the bidding war, recently criticizing the Ellison family despite their known support for his political campaigns. In a December 15 social media post, Trump wrote that if the Ellisons "are friends, I'd hate to see my enemies!"
The comment came after perceived mistreatment by CBS News' "60 Minutes"—which Paramount owns through CBS. Whether Trump's DOJ will view either transaction differently remains an open question for antitrust review.
Netflix has pointed out that its financing structure "is not subject to review by the Committee on Foreign Investment in the United States (CFIUS)"—a dig at Paramount's original financing, which included Middle Eastern sovereign wealth funds from Saudi Arabia, Qatar, and Abu Dhabi.
The Bottom Line
The board has spoken—twice. But the final decision rests with WBD shareholders, who must choose between:
Netflix's path: $27.75 per share plus Discovery Global equity, backed by a $430 billion investment-grade company, with regulatory uncertainty but board support.
Paramount's path: $30.00 all-cash, backed by a near-junk-rated company with 6.8x leverage, against board recommendation, with an extended deadline to decide.
As analyst Mike Proulx of Forrester noted after the first rejection: "If you think you know how this plot ends, think again."
That wisdom holds. With three weeks until Paramount's tender offer expires, this Hollywood drama may yet have more acts.