Warner Bros. has once again rejected Paramount’s latest hostile bid, according to media reports.

The board of Warner Bros. Discovery (WBD) has unanimously rejected Paramount Skydance’s latest attempt to acquire the studio, saying its revised $108.4 billion hostile bid is a risky leveraged buyout that investors should reject.

In a letter to shareholders on Wednesday, the WBD board said Paramount’s offer depends on “an extraordinary amount of debt financing” that increases the risk of closing.

It reaffirmed its commitment to streaming giant Netflix’s $82.7 billion deal for film and television studios and other assets.

However, some investors pushed back at Warner Bros. Matthew Halbower, CEO of Pentwater Capital Management, said the media giant’s board had “made a mistake” by not considering Paramount’s bid.

On Wednesday, Hellbower described the deal on CNBC as “economically sound.”

Paramount’s financing plan would leave the smaller Hollywood studio with $87 billion in debt after the acquisition closes.

The Warner Bros. board informed shareholders on Tuesday, after voting against a $30-a-share cash offer, that the deal would result in the largest leveraged buyout in history.

The letter was accompanied by a 67-page amended merger filing that contained Paramount’s rejection of the offer.

The Warner Bros. board deemed the Paramount deal ‘inadequate’.

The amended Paramount offer “is inadequate, particularly given the inadequate value it provides,

the lack of certainty in Paramount Skydance’s ability to complete the offer, and the risks and costs to be borne by WBD shareholders if Paramount Skydance fails to complete the offer,” the Warner Bros. board wrote.

Paramount, which has a market value of about $14 billion, proposed using $40 billion in equity, which would be personally guaranteed by Oracle’s billionaire co-founder Larry Ellison, whose son David is Paramount’s CEO, and $54 billion in debt to finance the deal.

Warner Bros’s board said its financing plan would further weaken its credit rating, which S&P Global already rates at the junk level, and put pressure on its cash flow, increasing the risk that the deal will not close.

Netflix, which offered $27.75 per share in cash and stock, has a market value of $400 billion and an investment-grade credit rating.

The decision keeps Warner Bros. on track to pursue a deal with Netflix, even though Paramount amended its bid on Dec. 22 to address earlier concerns about the lack of a personal guarantee from Ellison, who is Paramount’s controlling shareholder.

Paramount and Netflix are competing to win control of Warner Bros and its prized film and television studios and its extensive content library.

Its lucrative entertainment franchises include Harry Potter, Game of Thrones, Friends and the DC Comics universe, as well as iconic classic films like Casablanca and Citizen Kane.

Netflix appreciates

Netflix co-CEOs Ted Sarandos and Greg Peters welcomed Warner Bros.’s decision on Wednesday, saying it recognised the streaming giant’s deal as “the superior proposal that will deliver the greatest value to its shareholders, as well as consumers, creators and the broader entertainment industry”.

Warner Bros. Chairman Samuel Di Piazza told CNBC that the company is not currently in talks with Paramount but is open to a transaction with the Ellison-led company and that both deals have a path to regulatory approval.

“From our perspective, they have to put something on the table that’s compelling,” he said, referring to the Paramount offer.

Wednesday’s filing said Warner Bros.’s board met Dec. 23 to review Paramount’s revised proposal and noted some improvements, including Ellison’s personal guarantee and a higher reverse termination fee of $5.8 billion, but found “significant costs” were associated with Paramount’s bid compared to the Netflix deal.

Warner Bros. will be forced to pay a $2.8 billion termination fee to the streaming service.

Warner Bros. will also have to pay $1.5 billion in fees to its lenders and incur approximately $350 million in additional financing costs for abandoning its merger agreement with Netflix. Overall,

Warner Bros. said it would incur about $4.7 billion, or $1.79 per share, in additional costs to end its deal with Netflix.

The board reiterated some of the concerns raised on December 17, such as that Paramount would impose operating restrictions on the studio that would harm its business and competitive position.

including blocking plans to spin off the company’s cable television networks into a separate public company, Discovery Global.

Warner Bros. said that Paramount offered “inadequate compensation” for the loss to the studio’s business if the deal did not close.

The board wrote “despite clear direction” on the shortcomings in its bid and potential solutions, Paramount “repeatedly failed to present the best offer” to Warner Bros. shareholders.

The jockeying for Warner Bros. has become Hollywood’s most-watched acquisition battle, as studios vie for a bigger move amid growing competition from streaming platforms and volatile theatrical revenues.

While the headline price of Netflix’s offer is lower, analysts have said it presents a clearer financing structure and less execution risk than Paramount’s bid for the entire company, including its cable TV business.

Ross Baines, an analyst at eMarketer, said, “WBD doesn’t want to sell to Paramount, so it will continue to reject Paramount as long as it is able.”

“But this process is not over…Paramount will have the opportunity to make further efforts.”

Harris Oakmark, Warner Bros.’s fifth-largest investor, previously told Reuters that Paramount’s revised offer was not “substantial”, noting that it was not enough to cover the breakup fee.

Paramount has argued that its bid would face fewer regulatory hurdles, but a combined Paramount-Warner Bros. entity would create a formidable competitor to industry leader Disney and merge two major television operators and two streaming services.

The valuation of Warner Bros.’s planned Discovery Global spin-off, which includes cable television network CNN, TNT Sports and the Discovery+ streaming service, is seen as a major sticking point. Analysts have valued the cable channels at up to $4 per share, while Paramount has suggested only $1.

Lawmakers from both parties have raised concerns about further consolidation in the media industry, and US President Donald Trump has said he plans to consider this landmark acquisition.

On Wall Street, Warner Bros. Discovery is up 0.3 per cent in afternoon trading amid news of the rejected bid. Netflix is ​​also up 0.3. Meanwhile, Paramount is down 0.1 per cent.