What's happened
As of January 7, 2026, Warner Bros. Discovery (WBD) has rejected Paramount Skydance's hostile $78 billion all-cash takeover bid, citing excessive debt and risks to closing. WBD continues to back Netflix's $82.7 billion deal for its streaming and studio assets, despite Paramount's efforts to sweeten its offer with a $40.4 billion personal equity guarantee from Larry Ellison. The battle centers on differing valuations of WBD's cable assets and regulatory hurdles ahead.
What's behind the headline?
Paramount's Bid Faces Structural Challenges
Paramount Skydance's hostile takeover attempt is hampered by its reliance on unprecedented debt financing, described by WBD as "the largest leveraged buyout in history" with $87 billion in pro forma gross debt. This financial structure raises significant execution risks, undermining shareholder confidence and regulatory approval prospects.
Valuation Disputes Over Cable Assets
A critical battleground is the valuation of WBD's cable networks, including CNN and TNT. Paramount argues these assets are worth near zero, citing the poor market debut of Comcast's Versant spinoff as a cautionary parallel. Conversely, WBD and some analysts contend these assets hold substantial value, potentially 4-5 times higher, due to scale and international reach.
Netflix's Strategic Advantage
Netflix's $82.7 billion offer targets only WBD's streaming and studio businesses, excluding cable assets, which would be spun off separately. This narrower focus, combined with Netflix's $400 billion market cap and investment-grade credit rating, offers a clearer path to closing and less regulatory uncertainty.
Legal and PR Maneuvering
WBD has accused Paramount of litigiously leaking information and preparing for potential lawsuits, signaling a contentious battle ahead. Paramount's "DefCon 1" strategy may involve legal action to challenge WBD's board and sway shareholders.
Outlook and Impact
The takeover saga will likely extend into 2026, with Paramount potentially raising its bid or pursuing legal remedies. Regulatory scrutiny, especially from the US Department of Justice, will be intense given the market implications. Shareholders face a complex choice between a higher all-cash offer with execution risks and a lower-value but more certain Netflix deal.
This battle highlights the evolving dynamics of media consolidation amid streaming competition and the challenges of valuing legacy cable assets in a cord-cutting era.
What the papers say
Charles Gasparino of the NY Post highlights WBD's characterization of Paramount's bid as "the largest LBO in history," emphasizing the $87 billion debt load and questioning Paramount's ability to close the deal. He notes WBD's preference for Netflix's combined cash-stock offer and the risks Paramount's structure poses to shareholders. Business Insider UK provides detailed financial analysis, noting Paramount's valuation of WBD's cable assets at near zero, based on the poor performance of Comcast's Versant spinoff, contrasting with WBD's and analyst Rich Greenfield's more optimistic valuations. The Guardian's Mark Sweney reports on WBD's unanimous board rejection of Paramount's offer, citing insufficient value and risks, and the regulatory challenges both deals face, including anticipated scrutiny from the US Justice Department and political involvement from President Trump. Ars Technica's Jon Brodkin underscores WBD's preference for Netflix due to its stronger financial position and clearer path to closing, while noting Paramount's bid includes more assets but carries higher risk. The Times of Israel and Al Jazeera echo WBD's concerns about Paramount's debt-heavy offer and reaffirm Netflix as the superior proposal, while also noting some investor dissent. The New York Times' Andrew Ross Sorkin and Lauren Hirsch provide context on the ongoing bidding war and regulatory hurdles, highlighting the strategic implications for Hollywood's streaming landscape. Collectively, these sources reveal a high-stakes, complex takeover battle with contrasting valuations, financial structures, and strategic visions for Warner Bros. Discovery's future.
How we got here
Warner Bros. Discovery agreed in December 2025 to sell its streaming and studio business to Netflix for $82.7 billion. Paramount Skydance, backed by billionaire Larry Ellison, launched a hostile bid for the entire company, including cable networks like CNN. WBD's board has repeatedly rejected Paramount's offers, favoring Netflix's proposal due to concerns over Paramount's high debt financing and deal certainty.
Go deeper
- Why is Warner Bros. rejecting Paramount's offer?
- How does Netflix's deal differ from Paramount's bid?
- What are the regulatory challenges facing these mergers?
Common question
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Why Did Warner Bros. Block Paramount's Takeover Bid?
Warner Bros. Discovery recently rejected Paramount's hostile takeover attempt, citing concerns over debt and strategic priorities. This move raises questions about the future of media mergers and what drives these big decisions. Below, we explore the reasons behind Warner Bros.'s stance, how other offers like Netflix's compare, and what this means for the media industry moving forward.
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More on these topics
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Lawrence Joseph Ellison is an American business magnate, investor, and philanthropist who is a co-founder and the executive chairman and chief technology officer of Oracle Corporation.
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Netflix, Inc. is an American technology and media services provider and production company headquartered in Los Gatos, California. Netflix was founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California.
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Warner Bros. Discovery is an upcoming American multinational mass media and entertainment conglomerate. The company will be formed though the merger of WarnerMedia and Discovery, Inc., which is expected to be completed by mid-April 2022.
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David Ellison is an American film producer and the founder and CEO of Skydance Media.
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ViacomCBS Inc. is an American diversified multinational mass media conglomerate formed through the merger of CBS Corporation and the second incarnation of Viacom in 2019, which were split from the original incarnation of Viacom in 2005.
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David M. Zaslav is the president and chief executive officer of Discovery Inc., a position he has held since January 2007.
Most recently under Zaslav, Discovery acquired Scripps Networks Interactive, in a transaction which closed in March 2018.
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Theodore Anthony Sarandos Jr. is an American businessman who serves as the co-chief executive officer and chief content officer for Netflix.