A letter to shareholders noted that, under the Netflix agreement, they would receive significant value in $23.25 in cash and shares of Netflix common stock. Additionally, shareholders would receive value through their ownership in Discovery Global. 

Whereas, in accepting an offer from Paramount, it’s argued that WBD would have to pay a $2.8 billion termination fee to Netflix for the existing merger agreement, a $1.5 billion fee for failing to complete a debt exchange, and an incremental interest expense of approximately $350 million.

There is also a lack of belief that the deal with Paramount could close, with it holding a pre-existing $14 billion market cap and attempting to execute an acquisition requiring $94.65 billion of financing, almost seven times its market cap. Simply put, WBD argues that Netflix can afford the merger agreement while Paramount cannot, and such a transaction as the latter is believed to be too large a risk compared to the former.

It’s also said that Paramount has continued to submit offers including deficiencies outlined by WBD, all while asserting that said offers do not represent “its best and final” proposal.

“They are well aware of the reasons behind the Board’s determination that the Netflix merger agreement is superior to its offer. If on December 4 [Paramount] did not recognize the weaknesses of its proposal when the Board concluded the process, it has now had several weeks to study the Netflix merger agreement and adjust its offer accordingly. Instead [Paramount] has, for whatever reason, chosen not to do so.”