WBD's Bidding War: A $30 Catalyst or a $28.60 Stalemate?

The boardroom battle for Warner Bros. Discovery has crystallized into a binary event with a hard deadline. The company has initiated a formal review of strategic alternatives after receiving unsolicited interest from multiple parties, including a hostile $30-per-share offer from Paramount Skydance. This move directly conflicts with the board's prior decision to pursue a $27.75-per-share cash-and-stock deal with Netflix for the studio and streaming business. The immediate catalyst is now a ticking clock: Paramount's tender offer expires on January 21.

The setup is a classic proxy fight in the making. Paramount is trying to fast-track its case, having filed a lawsuit to force Warner Bros. Discovery to disclose details of its deal evaluation. A Delaware judge recently rejected Paramount's bid to expedite that lawsuit, but the company is still pushing to make its case to shareholders before the tender offer expires. The board, which has already unanimously recommended the Netflix deal, has dismissed Paramount's legal move as a distraction. Yet, the board's own prior rejection of a hostile bid sets a high bar for Paramount's success.

For investors, the January 21st deadline creates a clear, near-term inflection point. It will determine whether Paramount's aggressive tactics can force a re-evaluation of the Netflix deal or if the board's chosen path will proceed unimpeded. The outcome hinges on whether Paramount can convince shareholders that its $30 offer, despite being rejected before, now presents a superior and less risky path forward.

The Setup: Competing Offers and Immediate Implications

The competing bids present a stark contrast in structure and perceived risk. Paramount's offer is all-cash and fully financed, a point it emphasizes as providing a "superior and quicker path to completion" for shareholders. The company has secured commitments from major banks and has pledged to backstop the deal with equity from the Ellison Family and RedBird Capital. This contrasts sharply with the Netflix transaction, which is a mixed-cash-and-stock deal valued at $82.7 billion. Paramount argues this creates "inferior and uncertain value" due to a "protracted and uncertain multi-jurisdictional regulatory clearance process" and the volatility of a stock component.

The market's current price action reflects this tension. Warner Bros. Discovery stock has been trading around $28.60, implying a market capitalization of roughly $70.9 billion. This valuation sits below both competing offers. It suggests the market is pricing in significant execution risk for the Netflix deal, perhaps doubting its regulatory approval or the long-term value of the combined entity, while also viewing Paramount's tender offer as a credible but not yet fully priced-in alternative.

The immediate implication is a race to the deadline. Paramount is pushing to deliver its offer directly to shareholders, having filed a lawsuit to force disclosure and planning to nominate directors to challenge the Netflix deal. The board, meanwhile, maintains its recommendation for the Netflix transaction. The stock's trading range near $28.60, despite the $30 offer, indicates that many investors see the Paramount bid as a high-risk, high-reward catalyst rather than a guaranteed outcome. The setup is a classic battle between a certain, higher cash price and a more complex, but potentially larger, alternative.

The Playbook: What to Watch Next

The immediate tactical events are clear. Paramount's legal and proxy fight is escalating, but its recent procedural setback shows the board is not easily swayed. A Delaware judge has turned down Paramount's bid to fast track a lawsuit seeking disclosure about the Netflix deal evaluation. This is a minor delay, but it underscores that Paramount must still win its case on the merits before the January 21st tender offer deadline. The company has filed the lawsuit and plans to nominate directors to the board to challenge the Netflix transaction, a direct move to force a shareholder vote. The board's dismissal of this as a "distraction" sets the stage for a full-blown proxy fight if the tender offer fails.

The stock's current price near $28.60 is the key signal. If Paramount's aggressive tactics gain traction and convince enough shareholders to tender, the stock could rally toward its $30 offer. But if the board's recommendation holds and institutional investors side with the Netflix deal, the stock may remain stuck or even drift lower on concerns about regulatory hurdles. The January 21st deadline is the first major test.

Beyond the immediate battle, watch for any shift in the separation plan. Warner Bros. Discovery has stated it will continue to pursue a split for a mid-2026 timeframe. This separation into Warner Bros. and Discovery Global remains a potential alternative path that could be accelerated or abandoned depending on which offer wins. The board's review of strategic alternatives includes this option, meaning the final outcome could be a standalone Warner Bros. entity, a merger with Netflix, or a Paramount-led takeover. The setup is a race between a hostile tender offer and a complex, multi-year corporate restructuring.