• by Adam Buckman , Featured Columnist, Yesterday

The tone of Warner Bros. Discovery’s rejection of Paramount’s latest offer to buy the company is so disdainful that it is as if the WBD directors are literally holding their noses at the prospect of the Ellisons winning this battle for control of their company.

The WBD board just hates the idea of the deep-pocketed heir to the Oracle fortune, David Ellison -- and the creator of that fortune, David’s dad Larry -- getting their paws on WBD. 

The WBD strategy seems to be: Don’t even discuss the issue with Paramount anymore. Just reject, reject, reject.

WBD’s reaction to Paramount’s most recent offer to purchase the company for an estimated $108 billion came first thing Wednesday morning. The TV Blog got the email at 7:15 a.m. Eastern time. 

The WBD rejection -- styled as a letter to “fellow shareholders” -- blasted Paramount’s offer in terse and pointed prose. 

“The [WBD] Board unanimously determined that Paramount’s latest offer remains inferior to our merger agreement with Netflix across multiple key areas,” said Board Chairman Samuel A. DiPiazza Jr. in a prepared 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,” the statement said.

“Our binding agreement with Netflix will offer superior value at greater levels of certainty, without the significant risks and costs Paramount’s offer would impose on our shareholders,” WBD said.

As in its rejection of Paramount’s first offer in December, WBD emphasized that it has already signed off on a merger deal with Netflix. So what is the point of taking up this other offer?

In fact, WBD’s rejection announcement revealed that a major reason it is sticking with Netflix is because it will take a huge financial hit if it does not.

The WBD statement revealed that such penalties will be threefold -- a $2.8 billion termination fee to Netflix, a $1.5 billion fee “for failing to complete our debt exchange,” and an interest expense totaling approximately $350 million, the company said.

WBD’s letter to its shareholders takes pains to describe Paramount dismissively as a company with questionable future prospects as compared to Netflix.

“PSKY [Paramount Skydance] already has a ‘junk’ credit rating and it has negative free cash flows with a high degree of dependency on its legacy linear business,” WBD said.

“In contrast,” WBD said, “Netflix is a company with a market capitalization of approximately $400 billion, an investment grade balance sheet, an A/A3 credited rating and estimated free cash flow of more than $12 billion for 2026.”

Under the deal that WBD struck with Netflix, the streaming giant will buy the Warner Bros. half of WBD for an estimated $82.7 billion.

The tone of WBD’s new rejection of the latest offer from Paramount indicates that WBD is tired of hearing about Paramount’s hostile takeover bid and seeks only to work with Netflix toward the closing of the deal. 

Indeed, in Netflix’s own reaction on Wednesday to the WBD board’s unanimous support of their merger said processes are already in motion to set the stage for closing in 12-18 months, including “engaging with competition authorities [that include] the U.S. Department of Justice and European Commission.” 

The message from both WBD and Netflix seems to be: Sorry, Ellisons, but your ship has sailed.