\n Once again, Warner Bros. Discovery has chosen Netflix as its preferred suitor over Paramount.\n <\/p>\n
\n On Wednesday, the WBD board advised shareholders<\/a> that last month\u2019s revised offer from Paramount is still not as appealing as the existing agreement with Netflix<\/a> \u2014 even though Paramount said it had addressed many of Warner Bros.\u2019 biggest concerns.\n <\/p>\n \n The WBD board called Paramount\u2019s hostile takeover offer \u201cinadequate\u201d and overly risky.\n <\/p>\n \n In a letter to shareholders, the board likened Paramount\u2019s proposal to a leveraged buyout, a financial process that relies on using mostly borrowed funds to buy a company.\n <\/p>\n \n Paramount is much smaller than WBD, so \u201cto effect the transaction, it intends to incur an extraordinary amount of incremental debt \u2014 more than $50 billion \u2014 through arrangements with multiple financing partners,\u201d the WBD letter stated.\n <\/p>\n \n This structure \u201cposes materially more risk for WBD and its shareholders,\u201d including the possibility of the whole takeover plan falling apart, compared with the \u201ccertainty of the Netflix merger,\u201d the letter added.\n <\/p>\n \n Paramount has sought to alleviate concerns about the financing by pointing to the fact that one of the world\u2019s richest people, Oracle billionaire Larry Ellison, is bankrolling much of the proposed takeover. His son David Ellison, the CEO of Paramount, triggered a bidding war for WBD last year by making an unsolicited bid for the assets, including CNN.\n <\/p>\n \n WBD, led by CEO David Zaslav, then ran an auction process and accepted Netflix\u2019s offer of $27.75 per share for Warner Bros. and HBO, with $23.25 in cash and the rest in Netflix stock.\n <\/p>\n \n Paramount offered $30 per share and went public with that offer after it was spurned by the WBD board. But the board continues to insist that Paramount\u2019s proposal is inferior.\n <\/p>\n \n Along with concerns about debt financing and onerous conditions connected to the offer, WBD has cited the potential value of its cable assets, which Netflix is not acquiring.\n <\/p>\n \n WBD\u2019s cable channels, including CNN, are being broken off into a new, publicly traded company called Discovery Global later this year. The Warner board has argued that Discovery Global will have significant value on its own, while Paramount has valued it at just $1 per share.\n <\/p>\n \n When Paramount first launched its hostile takeover bid, WBD called the offer \u201cillusory\u201d and raised questions about the financing, which comes in large part from the royal families of Saudi Arabia, Qatar and Abu Dhabi.\n <\/p>\n