WBD Rejects Paramount Again

TNT Sports parent company Warner Bros. Discovery has rejected a second hostile takeover bid from Paramount, and it plans to continue with its separate merger deal with Netflix. 

Largely reiterating its prior rejection of the CBS Sports parent company, WBD said early Wednesday that the revised offer from Paramount and its CEO and chair David Ellison remains “inferior given significant risks, costs, and uncertainties compared to the Netflix merger.” WBD also said Paramount’s offer would be the largest leveraged buyout ever, and involve Paramount taking on debt and equity financing nearly seven times its total market capitalization. 

In part because of that, WBD said Paramount’s offer contains a much greater uncertainty of closing.

“The [Paramount] offer is not superior, or even comparable, to the Netflix merger,” WBD wrote in a letter to shareholders. “Paramount has repeatedly failed to submit the best proposal for WBD shareholders despite clear direction from WBD on both the deficiencies and potential solutions.”

Paramount had offered to buy all of WBD—including the sports and linear television assets—in a deal with an enterprise value of $108.4 billion. Instead, the $82.7 billion deal with Netflix will be focused on WBD’s studio and streaming businesses. 

WBD also plans to continue with a planned split of the company that will create Discovery Global, a new holding entity that would house TNT Sports. That split, and the Netflix deal, are slated to close in the latter half of 2026, and a new sports-centric streaming service is under development within TNT Sports and Discovery Global. 

New Financing, Same Result

After the initial rejection from WBD, Paramount had attempted to boost its bid, particularly the financing within it—including guaranteeing the backing from billionaire Larry Ellison, the father of David Ellison. Paramount, however, did not elevate the amount of its bid.

“The WBD board, management team, and our advisors have extensively engaged with Paramount and its representatives and provided it with explicit instructions on how to improve each of its offers,” WBD wrote. “Yet, Paramount has continued to submit offers that still include many of the deficiencies we previously repeatedly identified, none of which are present in the Netflix merger agreement.”

WBD also said that “certain fixed obligations that Paramount has incurred or may incur prior to closing, such as the multiyear programming and sports licensing deals, could further strain its financial condition” as a factor in the rejection.

Paramount did not immediately comment regarding the latest rejection. Spanning the time before WBD formally put itself up for sale and after, Paramount has made eight separate offers for the company. WBD, meanwhile, is bracing for a potential lawsuit from Paramount.

“WBD continues to be of the view that [Paramount] is a litigious counterparty, which raises concerns regarding the likelihood that the offer (or any related merger agreement) will be completed on the terms proposed,” the company said in a Wednesday filing with the U.S. Securities & Exchange Commission. 

Editors’ note: RedBird IMI, in which RedBird Capital Partners is a joint venture partner, is the primary investor in Front Office Sports.