WBD Rejects Paramount and Recommends Netflix Deal, 20 Years of "Squawk on the Street" 12/17/25

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David Faber (0:45)

Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Carl Quintanilla (0:56)

Good Wednesday morning, welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer and David Faber at post night of the New York Stock Exchange. Futures are stabilizing after three straight declines for the S&P, a lot of pots boiling today, whether that's Waller in the search for a Fed share, Warner, Oracle, biggest IPO of the year, tenure 416, oil's up a buck, silver 66 Our roadmap begins with no deal. Warner Bros. Discovery's board unanimously recommending shareholders reject the Paramount Skydance takeover offer. The board chair telling David, quote, it was not a hard choice.

David Faber (1:28)

Plus it is the biggest IPO of the year, the largest listing in the last four. Medline is returning to the public markets. What that means for the IPO pipeline, of course, is we head into a new year. And we are also celebrating a big anniversary right here for Squawk on the Street. They're telling me it's 20 years since our debut. Amazingly enough, right here at the New York Stock Exchange. All right, let's start off, of course, with that news. We got 7 a.m. was that long-awaited filing long, in the sense of at least, it's been almost 10 days, from Warner Bros. Discovery. It's a so-called 14-D9. But what it really is, is the explanation to its shareholders as to why it said no to Paramount's all-cash $30 share offer for the company, and yes, to the $27.75 in largely cash, but also some stock to Netflix. And remember, the Netflix bid does not include the global networks business, which will trade on its own, and will have some value, although frankly, that is a subject of great debate, and conceivably is the difference in terms of the overall view of value of some. But that was not the gating issue for the board of directors of Warner Bros. They were very much focused on what they felt was a lack of guarantee in the financing being proposed. Not on the debt financing, but on the equity financing, some $40-plus billion from Larry Ellison, from sovereign funds, including of course many in the Mideast, and others. And I asked the company's chairman right here on this set a couple of hours ago, what exactly was the lack of specificity in that offer that gave the board pause?

Samuel Di Piazza (3:13)

Netflix made a compelling offer.

It was heavy in cash, certainty of close, a high termination fee. It had all, and they responded to the operating issues that we were concerned about. Peace Guy had every opportunity to deal with that broad range of issues, and they chose not to. And ultimately the equity stack is always important here.

And to be very direct, nowhere in any of these proposals did Larry Ellison guarantee.

David Faber (3:51)

And that could have potentially changed the board's decision?

Samuel Di Piazza (3:54)

Well, obviously the ability to deal directly with Larry, if there was an issue to close, would be critical. Otherwise, closing might not happen. And some of the proposals, and you've read them now, some of the proposals gave multiple ways for that equity stack to disappear. Now, he guaranteed it through an irrevocable trust at the last minute. And frankly, that wasn't as good as an investment-grade company that purported strong value, great response to our concerns of what it took to operate. So, this is, I have enormous respect, as does the board, for the Ellison family and for the Paramount company. They just didn't measure up on these bids.

David Faber (4:46)

Now, while financing was one of the key points, guys, the other, of course, was the fact that they believe that both deals face a commensurate regulatory or similar amount of scrutiny from the regulators. Many people would disagree with that, viewing Netflix as perhaps one that will take longer and get more scrutiny. But I did have a chance to speak to Greg Peters, the co-CEO of Netflix, who explained at least how they view the regulatory challenges for putting together Netflix with what is also one of the top streamers, HBO.