Why Warner Bros Discovery is pushing back on Paramount’s $108 billion takeover attempt

Warner Bros shares were trading around $29 on Tuesday, just below Paramount’s offer price, suggesting markets were pricing in either a sweeter bid or a prolonged takeover battle.

The timing of the filing could still change, according to people familiar with the process, but the company’s leadership has been signalling growing scepticism about Paramount’s ability to close the deal on its current terms.

Investor backing begins to fray

The takeover effort suffered a setback on Tuesday when Affinity Partners, the investment firm founded by Jared Kushner, said it would no longer back Paramount’s offer. The firm said the “dynamics of the investment” had shifted significantly since it became involved in October, though it continued to argue that there was a strategic case for the bid.

The withdrawal removes a politically connected backer from the consortium and adds to uncertainty around Paramount’s financing. Warner Bros Discovery and Paramount both declined to comment on the development.

People who have spoken to Warner Bros Discovery’s senior management say the company remains confident in the Netflix proposal, while leaving the door open to a revised Paramount bid that addresses funding concerns and raises the price.

Why financing is a central concern

A major sticking point for Warner Bros Discovery is how Paramount plans to fund the acquisition. Paramount’s bid is backed by the Ellison family trust, whose wealth is largely tied up in Oracle stock. Warner Bros Discovery’s board is expected to argue that this structure provides less certainty than a deal personally underwritten by Larry Ellison, one of the world’s richest individuals.

By contrast, Netflix’s offer values Warner Bros Discovery’s studio and streaming assets at close to $83 billion and includes a $5.8 billion break-up fee, an unusually high termination payment that signals confidence in clearing regulatory hurdles.

Netflix’s bid offers $23.25 in cash and $4.50 in stock per share, and excludes Warner Bros Discovery’s traditional television assets such as CNN. The company has valued those remaining assets at between $3 and $5 per share.

Regulatory risks and geopolitical questions

David Ellison has argued that Netflix’s offer could face tougher regulatory scrutiny than Paramount’s bid, raising the risk that it may not close. Warner Bros Discovery is expected to push back on that view, pointing to Netflix’s willingness to commit to a large termination fee.

Regulators are also expected to examine the role of Middle Eastern sovereign wealth funds in the Netflix deal. Funds from Qatar, Saudi Arabia and Abu Dhabi have collectively pledged $24 billion, double the amount the Ellisons are contributing to Paramount’s bid.

A person close to Paramount said Kushner’s exit was intended to smooth relations with Warner Bros Discovery’s board and remove political distractions linked to his ties to President Donald Trump. The person added that the withdrawal had no impact on Middle Eastern backing.

Lobbying and political ties add another layer

Paramount has been viewed in Washington as closer to the Trump administration, partly due to the Ellisons’ relationship with the president. Netflix, however, has strengthened its own political footprint.

Brian Ballard, a prominent Trump fundraiser and head of a leading Washington lobbying firm, has dropped Paramount as a client while retaining Netflix. His firm confirmed the change but declined to explain the reasoning.

As Warner Bros Discovery prepares its formal response, the battle now hinges on whether Paramount is willing or able to improve its bid, and whether shareholders see enough certainty in the financing to challenge management’s recommendation.