Here's Why Warner Bros Wants to Reject Paramount's 'Illusory' £81bn Bid and Back the Netflix Deal Instead

Warner Bros. Discovery has officially declined the $108bn (£81bn) hostile takeover offer for Paramount and Skydance, describing it as illusory and risky.

The bid, headed by David Ellison and supported by a trust affiliated with his father, Larry Ellison, was offered at $30 (£22.42) per share but was soon rejected by Warner's board, which deemed it inferior to the current deal it had with Netflix.

Executives claimed that Paramount's financing plan was not confident because it relied on revocable trust arrangements, which could fail during an investigation. The aggressive bid, according to analysts, was meant to derail Warner's merger path rather than offer it a long-term alternative.

Netflix Deal Seen as Superior

The board of Warner Bros. Discovery reiterated its support for the Netflix merger it signed earlier this month. The acquisition is considered strategically congruent with Warner's long-term streaming goals and is more certain and synergistic than Paramount's cash-intensive strategy.

Executives expressed concerns that a step to exit the Netflix deal could trigger a $2.8bn (£2.09bn) termination fee, a high price that would once again impact the appeal of the Paramount bid.

The Netflix acquisition is also considered a cultural merger, given Warner's huge content base and Netflix's international distribution capabilities. According to analysts, the collaboration would transform the streaming landscape into a powerhouse capable of competing with Disney and Amazon Prime Video.

Paramount's Financing Concerns

The unpredictable nature of Paramount's financing was one of the board's core objections. The offer was based on a revocable trust over which Larry Ellison had control, making its reliability and regulatory approval unstable.

Warner executives termed the offer as 'illusory,' indicating that Paramount did not give the binding guarantees that a transaction of such magnitude required. The board stressed that shareholders' value would be better safeguarded by remaining on course with Netflix.

Strategic Implications

Turning down Paramount's offer will indicate that Warner is committed to a streaming-first approach. Through alignment with Netflix, Warner would gain the ability to be present in international markets where Paramount has not yet reached, especially in Europe and Asia, where Netflix already has a strong presence.

According to industry observers, Paramount can either now be compelled to increase its offer or go to court. There might be a bidding war, but Warner's very aggressive stance indicates that it believes in the course it has taken and is ready to accept short-term shocks in the name of long-term success.

The decision also emphasises the increasing concentration in the media with tech giants engaging more in contests over who owns the content pipes. The dismissal of Warner puts a premium on certainty, cultural and strategic fit rather than headline valuations, and serves as an indicator to investors that stability is more important than empty promises.

Warner Bros. Discovery's verdict on declining Paramount's £81bn reflects serious concerns about financial costs, contractual penalties, and the lack of strategic alignment. Conversely, promoting the Netflix deal signals Warner's commitment to a streaming-driven future focused on certainty and synergy rather than cash-driven disruption.

With the struggle over the future of Hollywood growing more intense, this move by Warner can be seen as a possible turning point in the next phase of entertainment worldwide, as other legacy studios will follow in its footsteps to address consolidation and technological challenges.