TLDR
- Paramount says WBD shareholders lose about $2.60 per share under the Netflix agreement.
- The $30 all-cash Paramount bid offers certainty versus Netflix stock and spin-off risk.
- Paramount values the Discovery Global spin-off at near zero based on leverage and outlook.
- Debt terms in the Netflix deal could reduce cash paid to WBD shareholders further.
- Paramount confirms $54 billion financing remains fully committed by major institutions.
Paramount Skydance Corporation (PSKY) reaffirmed its $30.00 all-cash offer to acquire Warner Bros. Discovery (WBD), challenging the board’s commitment to shareholder value. Paramount closed at $12.37, dropping 0.92%.
Paramount Skydance Corporation Class B Common Stock, PSKY
The company claims WBD shareholders are being shortchanged by approximately $2.60 per share under the competing Netflix agreement.
Paramount Claims Offer is Superior and Fully Financed
Paramount insists its all-cash offer delivers greater certainty and higher value compared to WBD’s existing deal with Netflix. The $30.00 per share bid is backed by $54 billion in committed financing from leading global institutions. Paramount also addressed prior concerns from WBD, including a personal equity guarantee from Larry Ellison and flexibility in interim operations.
While WBD has declined to engage, Paramount emphasized that its proposal avoids the uncertainties of stock-based consideration. In contrast, the Netflix agreement includes cash, Netflix shares, and equity in a yet-to-launch Discovery Global spin-off. Paramount argues this mix exposes WBD shareholders to valuation and execution risks.
Discovery Global Valuation Raises Concern
Paramount values Discovery Global at $0.00 per share based on a forward EBITDA multiple of 3.8x, matching Versant Media’s trading multiple. The estimate reflects $3.9 billion in projected EBITDA and includes allocated corporate costs and stock-based compensation. Paramount acknowledges a possible $0.50 per share M&A premium but considers even that optimistic given the financial outlook.
Versant Media’s recent IPO performance suggests that similar media entities face market skepticism. Discovery Global’s higher leverage and weaker portfolio are expected to drive further valuation discounts. Paramount argues that WBD has not provided enough detail to justify the spin-off’s implied value.
If Discovery Global is capitalized more conservatively, as in line with Versant’s leverage ratio, Paramount calculates a $10 billion reduction in cash and stock to WBD shareholders. That amount would instead be shifted to equity in a more highly leveraged and uncertain spin-off entity.
Netflix Deal Faces Structural Weaknesses
Paramount highlighted that the Netflix deal includes a debt adjustment clause that penalizes WBD if Discovery Global is under-leveraged. This structure reduces the cash payout and increases shareholders’ exposure to the lower-valued spin-off. Paramount states that WBD has not been transparent about this mechanism or its implications.
Paramount noted that its $54 billion financing remains valid and has been confirmed by Bank of America, Citibank, and Apollo. The company reiterated its readiness to engage with the WBD Board and emphasized that its offer meets all regulatory and financial standards.
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