Warner Bros Discovery has urged its shareholders to reject a $108.4 billion (£80.75bn) takeover bid from Paramount Skydance, marking a dramatic turn in the battle for control of the Hollywood studio.

Paramount had previously claimed its offer was “superior” to the $72 billion deal Warner Bros Discovery had already agreed with Netflix for its film and streaming assets. However, the Warner Bros Discovery board has “unanimously” recommended sticking with the Netflix agreement, believing it to be in the best long-term interests of the company.

The media giant first opened itself up to potential buyers in October, receiving “multiple” expressions of interest, including one from Paramount Skydance. A deal with Netflix was initially announced on December 5.

According to a detailed legal filing, the Warner Bros Discovery board cited “numerous and significant risks” associated with the higher offer from Paramount. They also expressed strong doubts about the full financial backing of the Ellison family – a prominent and wealthy American family – for the bid.

The board believes the Netflix offer is better financed and will deliver greater value to shareholders in the long run, reflecting the shifting power dynamics within the entertainment industry.

Despite this rejection, Paramount Skydance could still return with a revised offer, meaning the takeover saga is far from over. The following week, they launched a new bid for the entire Warner Bros Discovery company, including its television networks.

Paramount’s pursuit is backed by the billionaire Ellison family, known for their close ties to the US President. Any takeover of Warner Bros is anticipated to face intense scrutiny from competition regulators in both the United States and Europe.

A successful acquisition would give the new owner a substantial advantage in the competitive streaming landscape, gaining access to a vast library of popular films and TV shows, including franchises like Harry Potter, the MonsterVerse, and Friends, as well as the HBO Max streaming service.

The proposed merger has faced criticism from within the film industry. The Writers Guild of America (WGA), in both its East and West branches, has called for the deal to be blocked, arguing it could lead to lower wages and job losses for writers. The WGA also fears a reduction in the overall volume of content available to viewers.

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