Paramount or Neflix: Which Offer for WBD is Better?

The battle for WBD is far from over! Paramount has shown that they’re not going to take this battle lying down and launched a hostile, all-cash tender offer to acquire the entirety of Warner Bros. Discovery (WBD) for $30.00 per share. The aggressive maneuver, announced today, values WBD at an enterprise value of $108.4 billion and directly challenges a competing merger proposal from streaming giant Netflix. By taking their case directly to shareholders, Paramount is betting that the certainty of cash and a unified corporate structure will outweigh the allure of Netflix’s stock-and-spin-off hybrid deal.

The Details of the Offer

Paramount’s proposal is a classic tender offer, a mechanism used to bypass a company’s board of directors by soliciting shareholders to sell their shares directly to the acquirer. The offer price is set at $30.00 per share in cash for all outstanding shares of Warner Bros. Discovery which represents a significant premium—specifically, a 139% premium over WBD’s undisturbed stock price of $12.54 as of September 10, 2025 before rumors of a potential acquisition by someone came out.

Unlike the competing proposal from Netflix, which involves a more complex merger agreement and the separation of assets, Paramount is seeking to acquire 100% of WBD, including its lucrative but challenged Global Networks segment. The tender offer is scheduled to expire at 5:00 p.m. New York City Time on January 8, 2026, putting immediate pressure on WBD shareholders to make a decision.

David Ellison, Chairman and CEO of Paramount, stated explicitly that this public offer mirrors the terms privately presented to the WBD Board, which were ultimately rejected in favor of the Netflix deal. “We are taking our offer directly to shareholders to give them the opportunity to act in their own best interests and maximize the value of their shares,” Ellison declared, framing the move as a rescue mission for shareholder value.

Valuation: A Cleaner, Richer Number?

The core of Paramount’s argument rests on valuation certainty. At $30.00 per share, the offer implies a total equity value of $77.9 billion and an enterprise value of $108.4 billion when including the assumption of net debt.

Paramount’s presentation to investors painstakingly deconstructs the valuation gap between their offer and the Netflix bid. They estimate the total value of the Netflix package to be approximately to $28.75 per share although that does include a very low valuation of $1 for the Global Networks assets that Netflix doesn’t want.

However, Paramount argues this figure is illusory and fraught with risk. The Netflix deal is comprised of $23.25 in cash, roughly $4.50 in Netflix stock (subject to market volatility and a collar which currently Netflix trades below meaning that the 4.50 value won’t actually be 4.50 if that continues to be the case), and—crucially—ownership in a new standalone entity comprised of WBD’s linear cable networks which they claim management is overvaluing.

Paramount contends that the market is currently valuing these linear assets at depressed multiples and investors won’t realize any sort of premium for those assets once spun off. They use Versant, comcast’s potential spin-off of their linear TV assets as a comparable and argue that Global Linear networks high level of debt will put pressure on the market cap and lead to a terrible stock price.

By offering $30.00 in hard cash, Paramount asserts it is providing an immediate $1.25 per share premium over the offer value of the Netflix deal and doing it in cold hard cash removing the uncertainty that may come with the Netflix proposal.

The War Chest: How Paramount is Funding the Deal

A transaction of this magnitude requires immense liquidity. Paramount has structured a financing package designed to alleviate any fears regarding their ability to close. The acquisition is not subject to any financing conditions—a strong signal to the market.

The funding is split between new equity and debt:

1. $40.7 Billion in New Cash Funding (Equity):This massive equity injection is 100% backstopped by the Ellison Family Trust and RedBird Capital Partners. To demonstrate the solidity of this backing, Paramount noted that the Ellison Family Trust alone is supported by over $250 billion in Oracle stock, providing more than six times the required funding coverage. It seems like daddy Ellison is ready to pay up to give his son a strong competitive company to manage. Rich people and their rich people things.
2. $54.0 Billion in Debt Financing: The debt portion is fully committed by a syndicate of major financial institutions, including Bank of America, Citi, and Apollo as well as middle east money. This facility will not only fund the acquisition but also refinance WBD’s existing bridge loans.

This fortress balance sheet approach is intended to contrast with the perceived financial engineering required for the Netflix deal, particularly regarding the leverage that would be loaded onto the spun-off Global Networks business. While the Global Networks business would certainly be left with a high amount of debt, it doesn’t seem like Paramount post merger would be that much better off given that this is a $27B enterprise value company acquiring a company for 4 times that value. You can spin it however you want but that new merged company would be leveraged to hell and back but I guess that’s not the problem for WBD shareholders who may just want to get their cash and get out.

The Strategic Vision: Stronger Hollywood

Beyond the financials, Paramount is pitching a vision of a “Stronger Hollywood.” The merger would create a media colossus capable of competing with Big Tech incumbents while preserving the traditional creative ecosystem.

1. A Scaled Streaming Competitor

The combination of Paramount+ and HBO Max would create a definitive must-have streaming service. With a global footprint spanning over 100 countries and a deep library of premium content, the combined entity aims to rival Netflix, Amazon, and Disney in terms of subscriber scale and churn reduction. The strategy involves creating a premier platform for global sports, consolidating rights for the NFL, Olympics, UFC, PGA Tour, NHL, Big Ten, Big 12, and the Champions League under one roof. However, if they plan to combine those two services into one then I would assume the price point would be relatively high to make that work. I do wonder if they’d be better off bundling the offer much how Disney+ and Hulu are offered instead of just combining the two entities into one.

2. Commitment to Theaters

In a direct jab at Netflix’s streaming-first model, Paramount has committed to maintaining robust theatrical output. The combined studios would target 30+ theatrical releases annually, respecting traditional release windows. David Ellison emphasized that this approach protects the creative community and theatrical exhibitors, sectors that have viewed Netflix’s disruption with skepticism. While Paramount does have a better history of theatrical releases, this merger would remove one of the big studios and likely lead to a bevy of layoffs from overlapping roles.

3. Technology and Innovation

Leveraging the Ellison family’s ties, the combined company plans to utilize a close technology partnership with Oracle. This relationship is expected to modernize the legacy media technology stack, improving ad-tech capabilities, consumer user experience (UX), and cloud infrastructure efficiency. I guess daddy Ellison has to get his money somehow for putting so much of his own money on the line to try and make this happen.

4. Financial Synergies

Paramount projects that the merger will unlock over $6 billion in annual cost synergies. These efficiencies are expected to come from consolidating streaming platforms, rationalizing marketing spend, and streamlining corporate overhead. The company forecasts 20%+ medium-term adjusted EBITDA margins, generating robust cash flows to deleverage the balance sheet and reinvest in content.

Paramount vs. Netflix: The Tale of the Tape

Paramount’s tender offer documents aggressively target the weaknesses in the Netflix proposal. The comparison focuses on four key areas: Value, Structure, Regulatory Certainty, and Market Philosophy.

1. Cash vs. Complexity

Paramount offers 100% cash. Netflix offers a mix of cash, stock, and equity in a spin-off. Paramount argues that the Netflix stock component is subject to market volatility (noting a recent 20% drop in Netflix stock) and that the collar mechanism limits upside while exposing shareholders to downside risk.

2. The Left-Over Problem

The Netflix deal requires WBD to spin off its linear networks (CNN, TNT, TBS, Discovery, etc.) into a standalone company. Paramount describes this as leaving shareholders with a sub-scale and highly leveraged stub. They argue that separating high-cash-flow linear networks from the growth-oriented streaming business is financial engineering that destroys value. Paramount plans to keep the ecosystem whole, using linear cash flows to fund streaming growth. I do wonder if they think that business is worth so little, why not just make a better offer for streaming & studios and then pick up the left-over business on the cheap once it trades for a $1 on the stock exchange.

3. The Regulatory Gauntlet

Perhaps the strongest argument in Paramount’s arsenal is regulatory certainty. Paramount positions its deal as pro-competitive. By combining two smaller players to fight dominant incumbents like Netflix and Amazon, they argue the merger enhances consumer choice.

While that may be true on the streaming side as Netflix is the biggest streaming player acquiring a medium sized competitor, it’s certainly not true when it comes to the studio business. The Netflix acquisition retains one of the big five studios whereas the Paramount acquisition combines the #3 market share studio with the #5 market share studios removing one of the historical big boys from the playing field and giving Paramount more scale and more power on both fronts. This seems to move like a bigger regulatory concern than some streaming services merging together.

However, Paramount tries to paint the Netflix deal as an antitrust nightmare. Paramount asserts that a Netflix-WBD merger would create a dominant SVOD player with a 43% share of global subscribers, inviting intense scrutiny from the DOJ, FTC, and EU regulators. They predict the Netflix deal could face a protracted and uncertain multi-jurisdictional regulatory clearance process lasting up to two years, or be blocked entirely. Paramount, by contrast, expects to clear regulatory hurdles within 12 months.

4. Cultural Philosophy

Finally, there is a cultural argument. Paramount frames Netflix as a tech monopoly that commoditizes content, quoting filmmakers like James Cameron who have criticized the streaming giant’s model. Paramount positions itself as the Home of Storied Franchise IP (Star Trek, Top Gun, Harry Potter, DC, Lord of the Rings) that respects the art of filmmaking and the theatrical experience. I think neither company is particularly friendly for consumers or Hollywood here given that consolidation always eventually leads to higher prices and layoffs, that’s just reality.

Who Will Win?

Paramount’s $30 tender offer is certainly something that Warner Bros. Discovery shareholders cannot ignore. It offers immediate liquidity, a premium in cash to Netflix’s offer, and a unified strategic future backed by one of the wealthiest families in the world. By bypassing the WBD Board, Paramount has turned the decision over to the market. Shareholders must now weigh the certainty of Ellison’s cash against the potential—but risk-laden—upside of joining forces with the world’s largest streamer. At the very least it may cause Netflix to have to step up their offer and increase the cash portion of their business for investors to not start to question whether or not Paramount offers a better alternative.

One thing to remember is that there is a break-up fee on both fronts. Netflix would have to pay WBD $5.8B if they choose to step away from the deal for one reason or another but WBD would also have to pay Netflix a $2.8B break-up fee if they were to walk away from the Netflix agreement and choose a competing one like this one which should be taken into account as well.

Another part to consider is that a tender offer isn’t the easiest thing to get done. They would have to get investors to go against WBD management’s wishes and would require PSKY to garner 51% of shares to get majority control and make this happen. That seems very unlikely unless WBD management changes their tune.

At the end of the day, Paramount’s offer might be a case of too little, too late. If they had started closer to this number then they would be in the drivers seat but to come back and release this after another deal has been accepted seems like a case of just wanting everyone to see that this is what WBD management declined and hoping it would cause shareholder outrage and get something change. In my mind, this deal isn’t good enough to do that and both deals seem relatively similar from a value perspective. Naturally, I’d prefer a simpler faster deal so from that perspective, I like this deal more and I wouldn’t be upset if this was the one they went with but I doubt this does anything to change the initial decision.

It seems like the market thinks this is something PSKY needs to get done judging by the positive reaction to this offer and doesn’t love it for Netflix who they think might have to pay more to seal the deal. As a WBD shareholder, I’m fine with either buyer but I certainly wouldn’t mind a sweetened offer from Netflix due to this aggressive play by Paramount to shut the door on this and start moving forward. In the end, I think this is still Netflix’s bid to win and expect them to come out the winner. For more details on this deal, check out my video here.

Disclaimer: I am long WBD. This article is based on deal documents and press releases provided as of December 2025. Financial projections and regulatory outcomes are subject to change. This article is for informational purposes only and does not constitute financial or investment advice. The author is not a registered investment advisor. All investment strategies and investments involve risk of loss. Nothing contained in this article should be construed as investment advice. Any reference to an investment’s past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit. Please consult with a professional financial advisor before making any investment decisions.