Warner Bros Discovery just shut the door on Paramount’s aggressive attempt to derail its planned merger with Netflix. The company’s board unanimously rejected Paramount’s $108.4 billion hostile takeover offer on December 17, 2024, urging shareholders to ignore the bid and approve the existing Netflix deal instead. The rejection came with pointed accusations that the Ellison family, backing Paramount’s offer, never actually put their money where their mouth is.
The Bidding War Explained
This mess started when Warner Bros Discovery put itself up for sale earlier this year. Netflix emerged as the winner of a lengthy bidding process with an $82.7 billion deal announced on December 5. The deal gave Netflix access to Warner’s massive entertainment library, HBO brand, and its theatrical film division. Paramount, led by CEO David Ellison, wasn’t happy about losing and decided to go hostile by appealing directly to shareholders with a higher offer of $30 per share.
The key difference between the two offers goes beyond just price. Netflix’s bid focuses on Warner’s streaming and studio assets, deliberately excluding the Global Networks division that includes CNN, TBS, and TNT. Paramount’s offer covers everything, including those cable channels that are bleeding money as cord-cutting accelerates. On paper, Paramount’s all-cash $108.4 billion bid looks better than Netflix’s $82.7 billion mixed cash-and-stock proposal. But Warner’s board clearly doesn’t see it that way.
Why Warner Called BS
Warner Bros went hard in its rejection, specifically calling out what it sees as misleading claims from Paramount. The biggest issue revolves around financing. Paramount repeatedly claimed its bid had a full backstop from the Ellison family, meaning Larry Ellison and his relatives would guarantee the money if other funding fell through. Warner says that’s simply not true and never was.
According to Warner’s statement, Paramount’s proposal includes a $40.65 billion equity commitment with no Ellison family guarantee whatsoever. Instead, the funding supposedly comes from an unknown and opaque revocable trust, which Warner argues provides zero certainty. The company says it repeatedly told Paramount how important a full Ellison family commitment was, but despite assurances during the strategic review process, that commitment never materialized.
The situation got messier when Affinity Partners, the private equity firm run by Jared Kushner (Donald Trump’s son-in-law), pulled its backing from Paramount’s bid just days before Warner’s rejection. That left Paramount relying on sovereign wealth funds from Saudi Arabia, Abu Dhabi, and Qatar to finance the deal. While those funds represent serious money, the involvement of foreign governments adds regulatory complexity that Warner pointed out as a risk.
What This Means for Gaming
Warner Bros owns several major game studios including NetherRealm (Mortal Kombat), Rocksteady (Batman Arkham series), Avalanche Software (Hogwarts Legacy), Monolith Productions (Middle-earth Shadow series), and TT Games (LEGO games). Whoever ends up owning Warner controls these valuable franchises and development teams.
Interestingly, Netflix has been transparent about not placing much value on Warner’s gaming division. In an investor call, Netflix co-CEO Ted Sarandos admitted they didn’t attribute any value to the game studios in their valuation. Netflix sees gaming as a nice bonus but not the reason for the acquisition. The company’s gaming efforts so far have focused on mobile titles tied to its streaming properties, and there’s no indication that strategy would change.
What Happens Next
Warner’s rejection doesn’t automatically kill Paramount’s hostile bid. Technically, Paramount can still try to convince enough shareholders to tender their shares despite the board’s recommendation. However, with Kushner’s fund pulling out and Warner’s harsh criticism of the Ellison family’s financing commitments, Paramount’s chances look slim.
Netflix’s path forward isn’t exactly smooth either. The deal faces significant regulatory scrutiny under antitrust laws, with some members of Congress already raising concerns about consolidation in the streaming market. At least one HBO Max subscriber has already filed a lawsuit claiming the merger would reduce competition. Netflix expects the regulatory review process to take 12 to 18 months, meaning the deal won’t close until late 2026 at the earliest, possibly stretching into summer 2027.
Frequently Asked Questions
Why is Paramount trying to buy Warner Bros?
Paramount CEO David Ellison believes combining the two companies would create a stronger Hollywood studio capable of competing with streaming giants. Paramount argues its offer provides better value and more certainty than the Netflix deal.
What is a hostile takeover?
A hostile takeover happens when a company tries to acquire another company by appealing directly to shareholders, bypassing the target company’s board of directors who already rejected the offer. It’s called hostile because the target company’s management opposes it.
Will this affect HBO Max subscribers?
Netflix has told subscribers nothing changes immediately. HBO Max and Netflix will continue operating separately until the deal closes, which won’t happen for at least 12 to 18 months. Current membership plans remain in place, though Netflix hasn’t ruled out future price increases.
Who is backing Paramount’s bid?
After Jared Kushner’s Affinity Partners pulled out, Paramount’s financing comes from sovereign wealth funds controlled by Saudi Arabia, Abu Dhabi, and Qatar. The bid was originally expected to have backing from Larry Ellison’s family wealth, but Warner claims that commitment never actually existed.
What happens to Warner’s game studios?
If the Netflix deal goes through, studios like NetherRealm, Rocksteady, and Avalanche Software become Netflix properties. However, Netflix has been clear they don’t see gaming as a priority in this acquisition and didn’t factor the game division into their valuation.
Can Paramount still win?
It’s unlikely but technically possible. Paramount would need to convince enough Warner Bros shareholders to ignore the board’s recommendation and tender their shares. With the financing questions Warner raised and the loss of Kushner’s backing, that’s an uphill battle.
Why doesn’t Netflix want Warner’s cable channels?
Traditional cable channels like CNN, TBS, and TNT are declining assets as viewers cut cable subscriptions. Netflix only wants Warner’s streaming business, film studio, and content library, deliberately excluding the cable networks to avoid taking on those liabilities.
Bottom Line
This rejection essentially ends Paramount’s realistic shot at acquiring Warner Bros Discovery. The harsh language Warner used in calling out the Ellison family’s lack of financial commitment signals the board has zero interest in negotiating further. Unless Paramount comes back with ironclad financing guarantees and a significantly higher offer, Netflix appears headed toward regulatory review as the sole remaining bidder. For gaming fans worried about the future of franchises like Mortal Kombat and Batman, Netflix ownership probably means more focus on mobile adaptations and streaming tie-ins rather than big budget console releases. The next year will determine whether regulators allow this massive media consolidation to proceed or block it entirely.