Headlines have framed the Paramount–Netflix contest for Warner Bros. Discovery (WBD) as a clash between Hollywood heavyweights — with only one bidder able to emerge victorious. That framing may miss the bigger point. The real issue is whether WBD’s Board has run a fair process and in the end will have fulfilled its most basic obligation to shareholders.

As someone who studies corporate strategy and governance for a living, I find this episode troubling not because boards occasionally choose controversial deals, but because the behavior on display reflects a deeper pattern of process failure. When boards pre-commit to a preferred outcome and then retrofit justifications for rejecting alternatives, the problem is not strategic disagreement. It is governance breakdown.

What Boards Owe Shareholders When a Company Is in Play

When fielding multiple bids, the board’s job is not to protect a vision, a management team, or a carefully engineered transaction structure. It is to maximize value for shareholders through a process that is open, rigorous, and even-handed. That does not mean the highest nominal bid must always win. But it does mean that competing offers must be evaluated seriously, negotiated in good faith, and rejected only on grounds that are material, transparent, and consistently applied.

On that standard, WBD’s handling of Paramount’s bid raises red flags.

A Premium Cash Offer Deserves a Serious Market Test

Paramount’s proposal is not subtle. It is an all-cash tender offer at $30 per share, a clear premium to Netflix’s $27.75-per-share proposal, which blends cash and Netflix stock and depends on a multi-step transaction that first spins off WBD’s legacy cable networks. Cash offers have a virtue that governance scholars and courts alike have long recognized: they eliminate valuation ambiguity. Shareholders know exactly what they are getting, when they are getting it, and what risks they are no longer bearing.

By contrast, Netflix’s transaction requires shareholders to accept execution risk, market risk, and regulatory delay. It may succeed. But it is not risk-free—and boards should not pretend otherwise.

In such circumstances, a genuinely neutral board should lean into comparison, not deflection. It should press both bidders hard, surface weaknesses, demand fixes, and allow competition to do what competition does best. That is how shareholders ultimately benefit. Instead, what we appear to have is a board that settled early on a preferred path and treated the alternative as an inconvenience to be managed rather than a proposal to be tested.

The board’s public explanations—especially its latest rejection of Paramount’s revised bid—reinforce that impression. Paramount’s offer has been dismissed on the basis of an evolving set of financing concerns and structural imperfections, even as those concerns have been addressed and revised. Meanwhile, the Netflix transaction’s complexity and exposure to market and regulatory risk have been treated as manageable—or even virtuous. That asymmetry is difficult to defend.

Notably, WBD is increasingly relying on reasoning that suggests it is “playing to lose”—focusing on what it would have to pay Netflix as a termination fee, technical issues that would have to be addressed regarding its debt exchange and relatively de minimis costs like incremental interest expense. While every risk of course matters to shareholders, boards should focus on why to do the best deal, not why not to.

Of course, from my years studying these deals, it is evident that every large transaction has flaws at first contact. But serious boards surface those flaws through negotiation. They do not cite them as reasons to avoid negotiation altogether. When a bidder improves terms, adds guarantees, and still encounters shifting standards, shareholders are entitled to ask whether the process is truly about value—or about preserving a chosen deal architecture.

What is missing is transparency. Shareholders have not been shown a clear, side-by-side, risk-adjusted explanation for why a lower-priced, more complex transaction dominates a higher-priced cash offer. Nor have they been shown evidence that Paramount was given a fair opportunity to resolve perceived shortcomings. In governance terms, that omission matters more than any individual line item in either proposal.

When Process Failure Becomes a Market Problem

Here is the uncomfortable truth. Many boards like to say they welcome competition. But in practice, some welcome it only when it confirms decisions already made. When competition threatens to disrupt a carefully negotiated plan, it is often rebranded as “uncertain,” “risky,” or “not credible,” regardless of the value on offer.

Courts can police the most egregious abuses, but litigation is a blunt instrument. The more effective discipline comes from shareholders demanding accountability and directors remembering whom they serve. A board does not lose legitimacy by changing its mind in the face of a superior offer. It loses legitimacy by insulating itself from challenge.

If WBD’s board truly believes the Netflix deal is superior, it should welcome a transparent market test. It should disclose its assumptions, explain its tradeoffs, and show its work. Until it does, skepticism is not only warranted—it is rational.

Good governance is not about picking the right story. It is about running the right process. Shareholders deserve a board willing to test its convictions against the market rather than hide behind them. Regulators, watching yet another mega-deal reshape a critical industry, should be asking the same question.

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