Warner Bros. Discovery (WBD) has once again rebuffed a hostile takeover attempt from Paramount, reaffirming its preference for a proposed merger with Netflix and warning shareholders that Paramount’s offer remains financially risky despite recent revisions.

In a letter released Wednesday, the WBD board said Paramount’s updated bid, submitted last month, still fails to match the certainty and strategic clarity of the Netflix agreement. The board described Paramount’s proposal as “inadequate” and cautioned that its structure exposes shareholders to substantial downside risk.

Debt-Fueled structure raises red flags

At the heart of the board’s rejection is concern over how Paramount plans to finance the acquisition. According to WBD, the deal would resemble a leveraged buyout, relying heavily on borrowed money rather than equity.

Because Paramount is significantly smaller than Warner Bros. Discovery, the board said the transaction would require more than $50 billion in additional debt, sourced from multiple financing partners. That level of leverage, the letter warned, increases the risk of execution failure and could leave the combined company financially strained.

By contrast, the Netflix transaction offers what the board described as a higher degree of certainty, with clearly defined funding and fewer conditions attached.

Ellison backing fails to sway Board

Paramount has attempted to ease concerns by highlighting the financial backing of Larry Ellison, the Oracle billionaire and one of the world’s wealthiest individuals. Ellison is providing a substantial portion of the funding for the proposed takeover, led by his son David Ellison, Paramount’s chief executive.

David Ellison sparked the bidding contest last year with an unsolicited approach for Warner Bros. Discovery’s assets, including CNN. That move prompted WBD to launch a formal auction process, which ultimately led to Netflix’s agreed offer.

Netflix’s bid values WBD at $27.75 per share, consisting of $23.25 in cash and the remainder in Netflix stock. Paramount countered with a $30 per share proposal and made it public after being rejected privately by the board.

Despite the higher headline price, WBD continues to argue that Paramount’s offer carries unacceptable financing risks.

Cable Assets remain a key dispute

Another sticking point is the valuation of Warner Bros. Discovery’s cable networks. Channels such as CNN are set to be spun off into a new publicly listed company, Discovery Global, later this year.

The WBD board believes Discovery Global will hold significant standalone value. Paramount, however, has reportedly valued the spinoff at just $1 per share, a figure the board strongly disputes. Netflix is not acquiring these cable assets, which WBD says allows shareholders to retain upside potential.

Escalating guarantees, but no higher bid

When Paramount first launched its hostile bid, WBD dismissed it as “illusory” and raised concerns about financing sources, which included sovereign wealth-linked capital from Saudi Arabia, Qatar, and Abu Dhabi.

In response, Paramount amended its proposal in December. Larry Ellison personally guaranteed $40.4 billion of the financing for the $78 billion transaction, increased the breakup fee to $5.8 billion, and agreed to provide greater transparency into the Ellison family trust.

However, Paramount did not raise its offer above $30 per share, a factor that appears to have reinforced the board’s opposition.

What comes next for Paramount

Paramount now faces a strategic crossroads. It can abandon the pursuit, return with a higher offer, or attempt to bypass the board by forcing a shareholder vote.

Because the bid remains hostile, WBD shareholders could ultimately decide to ignore the board’s recommendation if Paramount chooses to put the proposal directly to a vote. For now, however, Warner Bros. Discovery’s leadership under CEO David Zaslav remains firmly aligned behind the Netflix deal.

As consolidation pressures continue to reshape the global media landscape, the standoff underscores how financing certainty and balance-sheet strength have become just as critical as headline valuations in determining the future of legacy entertainment giants.