Warner Bros has moved toward rejecting a $108bn hostile takeover bid from Paramount Skydance, according to reports, a decision that would clear the way for Netflix to proceed with its agreed acquisition of the company’s film and streaming businesses.
The decision follows weeks of competing offers and intensifying scrutiny over financing structures, regulatory risks, and long term value for shareholders.
The board is expected to formally recommend rejection to shareholders after Paramount bypassed management and went directly to investors with its proposal.
Warner Bros had previously agreed to sell its film studio and streaming operations to Netflix in a deal valued at $82.7bn.
That agreement would transfer control of assets including the Warner Bros movie studio and the HBO streaming service, while excluding cable networks such as CNN and TNT, which are set to be spun off separately.
Paramount Skydance responded with a higher all cash offer to acquire the entire company, arguing that its bid was superior in value and scope.
However, Warner Bros’ board has raised concerns over the Paramount proposal, citing deficiencies related to valuation, financing certainty, and deal terms when compared with Netflix’s cash and shares offer.
The board has also noted reduced confidence in Paramount’s financing structure, which relies heavily on the Ellison family trust rather than direct personal backing.
The withdrawal of support from Affinity Partners, led by Jared Kushner, further weakened Paramount’s position.
Regulatory risk has emerged as a central issue in the board’s deliberations.
Netflix’s bid is expected to face competition scrutiny, particularly over its potential influence in the North American streaming market, though the company has argued that broader market competition mitigates these concerns.
Netflix has also offered a $5.8bn termination fee, signaling confidence in its ability to secure regulatory approval.
Paramount’s bid has drawn separate regulatory questions due to significant funding commitments from sovereign wealth funds in Qatar, Saudi Arabia, and Abu Dhabi.
These funds would supply a majority of the equity financing, raising issues related to US ownership rules governing broadcast and telecom license holders.
Paramount has maintained that these rules do not apply because the funds would not exercise governance rights.
Despite the board’s recommendation, Paramount has indicated that its offer is not final, leaving open the possibility of further developments in the takeover battle.