Warner Bros. Discovery investors slam Paramount 'inferior scheme'

Core Viewpoint - Warner Bros. Discovery's board believes that Paramount's hostile bid is inferior to the merger with Netflix, emphasizing the risks associated with the Paramount proposal and the potential costs to shareholders if the deal fails [1][4][9]. Financial Comparison - Paramount's offer of $30 per share is described as "materially inferior" to the Netflix merger when assessed on a risk-adjusted basis, particularly considering the value of the Discovery Global cable and news business that will remain public [2][14]. - Warner's board outlined specific costs that would be incurred if they abandon the Netflix deal, including a $2.8 billion break-up fee to Netflix, a $1.5 billion charge related to a blocked debt exchange, and approximately $350 million in additional interest expenses [3][17]. Shareholder Sentiment - More than 93% of shareholders who have voted so far have rejected Paramount's offer and supported the Netflix merger, indicating a strong preference for the Netflix transaction [6][18]. - Warner's board has consistently communicated to shareholders that Paramount's proposal is subpar, reinforcing the narrative that investors prefer the Netflix deal [5][10]. Regulatory Considerations - Paramount's extension of the tender deadline is seen as an opportunity to lobby institutional investors who have not yet voted, suggesting that they believe they can still gain support against the Netflix transaction [11][18]. - Warner's board has highlighted the lack of commitment from Paramount to cover the costs associated with breaking the Netflix agreement if regulatory issues arise, which they argue makes Paramount's cash offer less attractive [17]. Market Dynamics - The ongoing battle between Warner and Paramount reflects a broader competition in the media industry, with Warner's board framing the decision as one between two different risk profiles for the same set of assets [14][19]. - Analysts have noted that the current voting figures serve as a real-time indicator of shareholder sentiment towards the competing offers [15].