Has the battle for streaming media come to an end? Warner's board supports Netflix and plans to reject the hostile takeover bid from Paramount.

Some media reports, citing informed sources, reveal that Warner Bros. Discovery (WBD.US) plans to reject the "hostile takeover bid" from Paramount Sky Dance (PSKY.US) due to concerns about financing arrangements and other terms. The informed sources stated that after reviewing and evaluating Paramount's offer, the Warner Bros. board of directors will urge shareholders to reject the acquisition bid; the sources requested anonymity to discuss confidential information. They stated that the board still believes that the value, certainty, and terms provided by the company's existing agreement with streaming leader Netflix, Inc. (NFLX.US) are superior to Paramount Sky Dance's proposal. The sources added that Warner Bros.' response to Paramount's acquisition bid could be submitted as early as Wednesday local time. The sources stated that no final decision has been made by either party, and the situation is still evolving. Representatives from Warner Bros. and Paramount declined to comment. The main concern reported is Warner Bros.' apprehension about Paramount's proposed financing scheme; Paramount is led by David Ellison, son of Oracle Corporation founder. Equity funds are backed by a trust managing the fortune of Larry Ellison, founder and chairman of Oracle Corporation. Sources stated that since this is a revocable trust, its assets can be withdrawn at any time; in such a case, Warner Bros. may have no recourse. One of Paramount's investors announced their withdrawal from the deal on Tuesday. Affinity Partners, led by Jared Kushner, son-in-law of US President Trump, revealed to the media that they are withdrawing support for the proposed blockbuster deal, citing the involvement of "two strong competitors". The board of Warner Bros. is also concerned about the company's ability to operate independently during a sale that may take a year or longer to obtain regulatory approval. Sources stated that Paramount did not provide Warner Bros. with enough flexibility to operate the business or manage the balance sheet. In a formal filing last week, Paramount stated that they have addressed Warner's concerns regarding the flexibility in the refinancing of debt and the $5 billion termination fee; this fee would be backed by the Ellison family. Paramount has also adjusted the terms of its offer in other ways as per Warner's request. Approximately $1 billion in financing from Chinese Tencent Holdings Ltd. has been withdrawn due to concerns that this funding may raise national security concerns with US regulatory authorities. Warner initially agreed this month to a transaction price of $27.75 per share (or approximately $83 billion in total value including debt) to sell its studio, streaming business, and HBO to Netflix, ending weeks of a "mega bidding war" between Netflix, Paramount, and Comcast Corporation Class A. Before the Netflix deal is finalized, Warner also plans to spin off cable TV networks such as CNN and TNT to its shareholders. Paramount, which owns MTV and Paramount+ streaming service, proposed to acquire all shares of Warner for $30 per share (or over $108 billion including debt). Just three days after the announcement of the proposed acquisition deal between Netflix and Warner, Paramount made a public tender offer for Warner's shares directly to shareholders. Paramount stated that their offer of $30 per share to Warner Bros. is not their "best and final" offer, hinting at room for improvement. As of the Tuesday closing on the US stock market, Warner's share price closed at $28.90 in New York, indicating that some investors are anticipating the company to receive a higher valuation. The preliminary agreement between Warner and Netflix prohibits Warner from actively soliciting proposals from other bidders but allows them to accept externally submitted proposals. Per the agreement between the parties, if a superior proposal emerges, Warner must provide Netflix the opportunity to match the higher offer to maintain the existing deal intact. For Warner, which company's acquisition aligns better with the company's future growth? Recent authoritative media reports indicate that the Warner board is leaning towards rejecting the Paramount proposal due to concerns over the reliability of financing (including structural doubts related to the Ellison family's trust endorsement) and the lack of operational and balance sheet flexibility during the transaction period, thus preparing to recommend shareholders to refuse it. Affinity Partners associated with Jared Kushner have been confirmed by multiple media outlets to have withdrawn their support for the Paramount deal on December 16, further exacerbating market concerns about the "stability of joint investors". If we use "feasibility + strategic certainty + value after risk adjustment" as criteria to measure which deal is more in line with the outlook, then Warner clearly leans towards the Netflix proposal: it has already been endorsed by the board with a signed agreement, the pricing structure, and delivery path (including the split arrangements) are more clearly defined; at the same time, Netflix, as the absolute leader in the streaming sector with a larger scale and stronger cash flow, can more directly convert Warner Bros.' numerous content assets and popular IP (HBO/movie and television library, etc.) into global subscription and monetization capabilities. On the other hand, Paramount Sky Dance, despite offering a higher surface bid (proposing $30 in cash), faces more obvious execution risk premiums based on current information: doubts about the financing structure and stability of investors, and still needs to go through a potentially "year-long" regulatory approval and uncertain operational period; the Warner Bros. board of directors also explicitly expressed more concern about its financing and terms constraints. Unless Paramount significantly improves the certainty of financing, flexibility in terms, and regulatory path, a "higher bid" does not necessarily equate to "better development prospects". For Netflix, if successful in acquiring Warner, they will have an immensely vast IP library Firstly, for Netflix, if successfully acquiring Warner Bros. (under this transaction scope, excluding "non-cable assets" including Warner Bros. Studios/television production tasks, HBO and HBO Max and their libraries), practically means that Netflix is upgrading from a "simple platform-type streaming media" to a "platform + top-tier studio + super library/IP" integrated giant, turning high-value content that has long required external procurement/licensing into controllable long-term assets, thus gaining significant advantage in the "streaming media war". Public information shows that the Warner Bros. Discovery board of directors has agreed to and signed a "final/binding agreement" with Netflix, with a transaction price of approximately $27.75 per share (cash + Netflix stock), corresponding to an enterprise value of approximately $83 billion, and is clearly to be acquired by Netflix after Warner's business split, including its studio/television production and streaming media (including HBO, HBO Max) "non-cable assets," while assets like CNN, TNT, and other cable networks are not included in the Netflix transaction scope. Additionally, for the global streaming media giant Netflix, acquiring Warner Bros. after the deal will significantly strengthen the company's content moat and pricing power: it can use classic libraries and long-running series to improve retention, and use super IPs to drive new movies, derivative series, games, licensing, and peripheral monetization; while also incorporating HBO's ability in producing globally acclaimed series into Netflix's global distribution system. If the deal goes through, Netflix will possess popular IPs (major content repeatedly mentioned/listed in public reports) mainly including numerous fantasy/super IPs, such as Harry Potter/"Wizarding World" (including the "Fantastic Beasts" series), DC Universe (Batman, Superman, Wonder Woman, Suicide Squad, etc.), The Matrix series, Conjuring series, Lord of the Rings series, The Hobbit series, and Dune series, and many other globally popular IPs, including HBO's flagship series universe - such as the Game of Thrones series (including "House of the Dragon" and "The Seven Kingdoms" etc., derivatives). The future prospects of Warner Discovery have sparked intense interest from both the industry and investors. The final outcome of the bidding war between Paramount Sky Dance, Netflix, and potentially other contenders will have a significant impact on the landscape of the entertainment industry. Warner Bros. Discovery's decision regarding its acquisition offer will be crucial in determining its strategic direction and growth trajectory in the fast-evolving streaming media market.