Warner Bros. Discovery (WBD) has once again shut the door on Paramount’s takeover attempt, choosing to stand by its existing deal with Netflix and warning shareholders that Paramount’s proposal remains too risky.

In a letter to shareholders on Wednesday, January 7, the WBD board described Paramount’s revised bid as “inadequate” and loaded with uncertainty, despite Paramount’s claims that it had addressed earlier concerns raised by WBD leadership.

According to the board, Paramount’s offer effectively mirrors a leveraged buyout and would require the company to pile on more than $50 billion in additional debt to complete the acquisition. The board stressed that this financing structure poses “materially more risk” to WBD and its shareholders compared to the certainty offered by the Netflix deal.

“This structure poses materially more risk for WBD and its shareholders,” the board said, contrasting Paramount’s proposal with what it described as the stability and clarity of the Netflix transaction.

Paramount has tried to ease investor concerns by pointing to the backing of Oracle billionaire Larry Ellison, who is helping finance the bid. His son, David Ellison, Paramount’s CEO, kicked off the bidding war last year with an unsolicited approach for WBD assets, including CNN.

Following that move, WBD, under CEO David Zaslav, launched a formal auction process and eventually accepted Netflix’s offer, valued at $27.75 per share — made up of $23.25 in cash and the remainder in Netflix stock.

Paramount later countered with a higher $30-per-share offer, but the WBD board has remained unconvinced, citing the scale of debt involved and what it called onerous conditions attached to the deal.

Another sticking point is WBD’s cable television assets, including CNN, which are not part of the Netflix deal. These assets are expected to be spun off later this year into a separate publicly traded company, Discovery Global. While WBD believes the unit could hold strong standalone value, Paramount has reportedly valued it at just $1 per share.

WBD also previously raised red flags over Paramount’s financing sources, some of which were expected to come from investors linked to Saudi Arabia, Qatar, and Abu Dhabi, describing the bid as “illusory.”

In response, Paramount announced on December 22 that Larry Ellison would personally guarantee the $40.4 billion he is contributing to the proposed $78 billion transaction. The company also raised its breakup fee to $5.8 billion to match Netflix’s penalty but did not increase its $30-per-share offer.

With this latest rejection, Paramount is left with three options: walk away, raise its bid, or take the fight directly to WBD shareholders. As a hostile bid, Paramount could still push for a shareholder vote that may override the board’s recommendation if investors find the offer more attractive.

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