Warner Bros. board spurns Paramount’s latest advance, continuing to support Netflix deal

It’s official: the sixth time was not the charm for Paramount, as the Warner Bros. Discovery board on Wednesday unanimously, and officially, voted to reject the company’s Larry Ellison-backed offer.

Paramount’s latest hostile takeover attempt didn’t boost its $30-per-share offer, but did include a $40.4 billion personal guarantee from Larry Ellison, the father of Paramount’s CEO, David Ellison. That update directly addressed the WBD board’s concern that Paramount’s deal being backed by a revocable trust meant it could pull out of the agreement at any time.

Still, the update wasn’t enough to persuade WBD to recommend the deal over Netflix’s.

“The Board unanimously determined that the Paramount’s latest offer remains inferior to our merger agreement with Netflix across multiple key areas,” Samuel Di Piazza Jr., chair of the WBD board, said in a statement. “Paramount’s offer continues to provide insufficient value, including terms such as an extraordinary amount of debt financing that create risks to close and lack of protections for our shareholders if a transaction is not completed.”

Warner Bros.’ board also noted that the company would owe Netflix a $2.8 billion termination fee if it pivoted to Paramount’s deal, along with a $1.5 billion fee for not completing its debt exchange.

“These costs would, in effect, lower the net amount of the regulatory termination fee that PSKY would pay to WBD from $5.8 billion to $1.1 billion in the event of a failed transaction with PSKY,” the company said.

Netflix issued a statement in support of the WBD board vote, writing: “Netflix and Warner Bros. will bring together highly complementary strengths and a shared passion for storytelling. By joining forces, we will offer audiences even more of the series and films they love — at home and in theaters — expand opportunities for creators, and help foster a dynamic, competitive, and thriving entertainment industry.”

Event contracts show increased optimism in Netflix’s likelihood to end up buying WBD, with its odds at 63% as of 8:40 a.m. ET, up from 57% as of 7 a.m. ET. Event contracts had Netflix’s odds hovering around 40% in the days following Paramount’s renewed bid.

(Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company subject to certain legal and regulatory restrictions. Event contracts trading is offered by Robinhood Derivatives, LLC, a registered futures commission merchant with the CFTC.)