WBD board backs Netflix tie-up and urges shareholders to spurn Paramount’s cash bid — chairman: ‘It was not a hard choice’

Board recommendation lands squarely with Netflix and frames the fight ahead

Warner Bros. Discovery (WBD) has told shareholders to reject Paramount Global’s (PARA) hostile all-cash tender offer and to favor the company’s pending combination with Netflix (NFLX). In a blunt message carried by the board and echoed by the chairman’s media comments — “It was not a hard choice” — WBD framed the Netflix route as a strategic union that delivers more long-term value than Paramount’s immediate cash pitch.

That statement does two things at once. It tries to blunt the short-term pressure of a hostile cash offer and to reassure investors who worry about deal certainty and the fate of WBD’s content business. For shareholders, the choice being presented is straightforward: accept a quick, known amount of cash now, or take a stake in a bigger, more strategic but longer and riskier combination with Netflix.

How markets reacted — what traders should watch next

The board’s recommendation changed the short-term math for traders. WBD shares moved to reflect the board’s view that the Netflix path is superior, while Paramount and Netflix stock responses reflected shifting probabilities of which bid will prevail. Traders watching this story should expect wide swings as the market prices the odds of a successful tender, a sweeter offer, or a drawn-out contest.

Options and volatility tend to spike in these situations. A live cash tender usually narrows the window for arbitrage — cash is simpler than a stock-swap — so arbitrage funds prize clean bids. With the board publicly rejecting Paramount, the tender may lose momentum, which raises the bid-ask on takeover probabilities and lifts implied volatility across WBD, PARA and NFLX options.

Short interest and hedge positioning matter too. If short sellers have positioned against WBD on the expectation of a quick sale at a certain price, the board’s stance can squeeze them or force them to reassess. For active traders, watch the size and speed of block trades in WBD and PARA, unusual options flows, and any regulatory filings from major shareholders that could tip the balance.

Netflix’s strategic combination vs. Paramount’s $30 cash bid — the core differences

Paramount’s all-cash $30-per-share pitch is simple to understand: it converts shares into cash and hands investors an immediate exit. That clarity is attractive because it lowers post-deal execution risk — once financed and completed, there’s little integration work for shareholders to worry about.

Netflix’s offer is a strategic combination. It likely involves equity, an exchange ratio, and promises of long-term synergies from combining library assets, global distribution and advertising capabilities. That can mean more upside for shareholders if the merged entity grows faster or captures higher margins, but it also introduces execution and regulatory risk. Financing for a strategic deal often includes stock issuance and complex covenants; that can dilute existing holders or leave terms contingent on future performance.

Put simply: Paramount’s bid is cleaner and faster. Netflix’s path aims for bigger strategic gains but requires more time and faces integration hurdles. The WBD board is betting the strategic upside and cultural fit of a streaming-first deal with Netflix outweigh the near-term certainty of cash.

Why the board said no, how a tender offer works, and the likely legal skirmishes

WBD directors have a legal duty to act in shareholders’ best interests. In this case they judged the Netflix combination to be superior on value and strategic logic. A hostile tender offer by Paramount bypasses the board and goes straight to shareholders, asking them to tender shares for cash before the board’s preferred plan is consummated.

Boards can fight hostile tenders with a range of tools: public recommendations, persuasion campaigns to big holders, and defensive measures like rights plans. Paramount can press on by extending and sweetening the tender, or it can shift to a proxy contest — trying to replace directors who oppose the bid.

Expect legal fights too. Tender offers invite litigation over disclosure, the fairness of competing proposals, and whether the board fulfilled its fiduciary duties. Regulators add another layer: a combination involving Netflix and WBD would draw antitrust scrutiny because it reshapes the U.S. and global streaming and advertising markets. That scrutiny can slow or even block a deal.

What’s next — scenarios, timing and what investors should weigh

The contest now has a few clear paths. Paramount could sweeten its cash bid or extend a longer, more aggressive tender. Netflix could improve its terms or open direct talks with large WBD holders to lock in support. If neither budges, the war could shift to a proxy fight or to legal challenges that stretch for months.

Key catalysts to watch: any sweetened offer from Paramount, revised terms from Netflix, major shareholder endorsements or rejections, regulatory filing timelines, and court rulings if litigation starts. Tender offers typically run on multi-week clocks, but legal and regulatory pushes can extend that timeline into quarters.

For investors, this is a high-risk, high-stakes moment. Paramount’s cash offer is appealing for certainty-minded holders; it reduces exposure to integration and regulatory risk. The Netflix path may offer more upside if you believe the strategic benefits and regulators will clear the deal, but it is a longer, more uncertain road.

Our read: the board’s public stand strengthens Netflix’s hand in the court of shareholder opinion, but it does not end the fight. Short-term traders will find opportunity in volatility and spread plays. Long-term shareholders should accept that outcome depends on competing bids, shareholder alignments and regulatory decisions — any of which could swing value materially in either direction.

Sources

• prnewswire.com
• prnewswire.com
• paramount.com