Warner Bros Just Rejected a $108 Billion Offer Because Hollywood Math Makes No Sense

Paramount offered Warner Bros Discovery $108.4 billion. All cash. $30 per share. And the WBD board said no thanks well take the $82.7 billion offer from Netflix instead.

Twenty-five billion dollars less. And they chose that.

This is why Hollywood deal-making gives everyone headaches.

On Wednesday WBD officially rejected Paramounts hostile takeover bid calling it “inadequate” and full of “significant risks and costs.” The board is sticking with Netflix’s offer which values the studio and streaming assets at $72 billion in equity value. The cable networks get spun off separately.

WBD Board Chair Samuel Di Piazza told CNBC it “wasnt really a hard choice.” Which is an interesting thing to say when youre turning down $25 billion extra dollars.

But heres the thing. The Netflix deal is mostly cash with some stock. Its cleaner. Netflix has a $400 billion market cap so they dont need financing. Paramount’s offer requires $41 billion in new equity from the Ellison family and RedBird Capital plus $54 billion in debt from Bank of America, Citi and Apollo.

Thats a lot of moving pieces. A lot of things that could go wrong.

And then theres the legal drama. Paramounts lawyers at Quinn Emanuel sent WBD a letter on December 3rd that was apparently so aggressive that Paramount’s own financial and legal advisors reached out separately to say it “should not have been sent” and was “not helpful” and a “mistake.”

Thats not exactly confidence-inspiring.

The stakes here are genuinely massive. Were talking about Warner Bros studios. HBO. HBO Max. DC. The film library that includes everything from Casablanca to Harry Potter to Friends. Whoever wins this gets a massive content advantage in the ongoing streaming wars.

Netflix has been the frontrunner since early December when WBD formally announced theyd accepted their offer. But Paramount CEO David Ellison – son of Oracle billionaire Larry Ellison – went hostile. Took the offer directly to shareholders. Tried to go over the boards head.

That gambit appears to have failed. For now.

Because this isnt over. Sources say Ellison and the Paramount team are waiting to see WBDs response before deciding their next move. They could come back with a higher bid. They could file lawsuits. They could try to convince enough shareholders to tender their shares anyway.

A shareholder vote is expected in spring or early summer 2026. Thats a lot of time for things to change.

Some shareholders are already grumbling. Mario Gabelli of GAMCO Investors told CNBC he had been leaning toward the Paramount offer and hopes for more back-and-forth from both bidders. “The most important part is to keep it in play.”

Translation: let them bid each other up.

Netflix co-CEO Ted Sarandos welcomed the boards recommendation in a statement. “This was a competitive process that delivered the best outcome for consumers, creators, stockholders and the broader entertainment industry.” Standard corporate speak but hes not wrong about it being competitive.

Both deals face regulatory scrutiny. Combining Netflix and HBO Max would create a streaming behemoth. Even Trump has said it “could be a problem” given the market share. A Paramount-WBD combo would face similar questions.

Di Piazza dismissed antitrust concerns. “Either of these deals can get done.” Maybe. But regulators might have different opinions.

The Netflix deal includes a $5.8 billion breakup fee if it falls through. Thats real money on the table. It shows Netflix is serious. But it also shows theres some concern about whether they can actually close.

For now WBD is telling shareholders to reject Paramount and wait for the Netflix deal to close. Netflix is telling employees theyre “genuinely excited about whats ahead.” Paramount is presumably regrouping.

And somewhere in all of this someone has to figure out what happens to CNN and the other cable networks that get spun off as “Discovery Global” in the Netflix deal. Good luck to whoever ends up with that.

This story is far from finished. Twenty-five billion dollars is a lot of money to leave on the table. Even in Hollywood.