Warner Bros. Discovery Inc. just made a gutsy bet on its own survival. The board of the company unanimously recommended that shareholders vote against the hostile takeover attempt launched by Paramount Skydance. After judiciously and thoroughly weighing the merits of the unsolicited offer, the board announced its recommendation early on Wednesday. They were disappointed with it in light of an earlier Netflix bid that they found to be better.
Warner Bros. Discovery Inc.’s board members made clear that they believe there is little value to Paramount’s tender offer. They believe that the proposal does not go far enough to ensure a winning acquisition. At the same time, they call out considerable risks and costs associated. Samuel A. Di Piazza, Jr., board member, said that
“Following a careful evaluation of Paramount’s recently launched tender offer, the Board concluded that the offer’s value is inadequate, with significant risks and costs imposed on our shareholders.”
The competitive acquisition context Adweek has called Paramount Skydance’s offering a hostile bid—which makes sense against the backdrop of this year’s frenzy of M&A activity. The board claims that Netflix’s original merger deal is still in the best interest of shareholders. Inextricably tied to their mission, it dovetails beautifully with their priorities and ensures stronger return-on-value. Ted Sarandos, associated with Netflix, emphasized the importance of this competitive process, stating that it ultimately benefited consumers, creators, stockholders, and the broader entertainment industry.
Within its recommendation, the Warner Bros. Discovery Board strongly expressed their conviction that the Paramount proposal
“provides inadequate value and imposes numerous, significant risks and costs on WBD.”
This clear stance reflects their commitment to securing a deal that is not only beneficial but strategic in nature. The board underscored that Netflix’s bid offers “more certain value for our shareholders,” reinforcing their position in favor of this earlier proposal.
Right now, studios like Warner Bros. Discovery Inc. are stuck trying to figure out tense acquisition talks. The board’s fiduciary duty demands that we ensure any deal serves the interest of shareholders and encourages development in the entertainment industry.
