Warner Bros. Discovery Inc.’s board of directors has given Paramount Skydance Corp. yet another dismissal, rejecting its latest $108.4 billion tender offer despite revisions.

In doing so, the media and entertainment giant will continue to engage streamer and production company Netflix Inc. for the sale.

Paramount’s bid presents too many risks for the HBO owner, it seems. The board said the offer provides insufficient value, an “extraordinary” amount of debt financing, less operational flexibility and no shareholder protection if the deal does not ultimately close. It called the offer “the largest LBO in history” with $87 billion in total pro forma gross debt, which is more than six times the market cap for Paramount itself.

“Our binding agreement with Netflix will offer superior value at greater levels of certainty, without the significant risks and costs Paramount’s offer would impose on our shareholders,” said Samuel A. Di Piazza, Jr., chair of the Warner Bros. Discovery board, in a Jan. 7 statement.

Warner Bros. Discovery’s stock rose by 0.42% Wednesday since the announcement to close at $28.59 per share. Paramount’s declined by 1.04% to close at $12.37 while Netflix’s rose by 0.09% to close at $90.72 per share.

One battle after another

The rejection came after Paramount revised its all-cash hostile takeover bid of $30 per share for the entire business to address key concerns that Warner Bros. Discovery outlined in its first rejection mid-December, when the board called the bid “inadequate” and “illusory” with uncertain funding prospects from a revocable trust fund. Other worries involve lower termination fees and limited operational flexibility for Warner Bros. Discovery to keep its business afloat.

Paramount Chief Executive David Ellison’s billionaire father and Oracle Corp. founder Larry Ellison has since personally guaranteed $40.4 billion out of the $40.7 billion equity financing from the trust fund, which he also agreed not to revoke or adversely transfer assets from. Paramount additionally raised the termination fee to $5.8 billion, matching Netflix’s terms.

In response to the board’s rejection on Jan. 8, David Ellison stood by his company’s initial offer, calling it “superior” to Netflix’s bid.

“Our offer clearly provides WBD investors greater value and a more certain, expedited path to completion.,” said Ellison in a statement. “Throughout this process, we have worked hard for WBD shareholders and remain committed to engaging with them on the merits of our superior bid and advancing our ongoing regulatory review process.”

While Paramount addressed many prior concerns in the new offer, the board continues to emphasize “downside risk vs. upside certainty,” wrote Ric Prentiss, head of telecommunication services and media equity research at Raymond James Financial Inc., in a report. Prentiss noted the risks that Warner Bros. Discovery sees in Paramount’s latest offer, but wrote that the objections are “increasingly incremental, and that a higher price could ultimately overcome them.”

The bidding saga between the three entertainment giants has been reeling for months, ever since Ellison sent an unsolicited offer to buy Warner Bros. Discovery in September at $19 a share. By December, Warner Bros. Discovery had entered into a definitive agreement with Los Gatos-based Netflix to sell its streaming and studios division for $82.7 billion in a cash-and-stock deal.

On the lookout: Versant

Analysts drew a parallel between Comcast Corp.’s latest spinoff Versant Media Group and Discovery Global, saying that the former’s performance could impact the valuation of the latter, tipping Warner Bros. Discovery shareholders toward Paramount’s bid.

Versant’s stock fell 13% on its first day of trading Jan. 5 and continued to plummet by almost 20% within two days. Its flopping debut could signal a dwindling interest in the cable TV business. Axios reported that “a sustained Versant slump could discourage belief in the prevailing valuation math” for Discovery Global.

Paramount also noted Versant’s shaky start of trading, as well as the recent drop in Netflix shares. Warner Bros. board “has not disclosed any analysis to help its shareholders value their potential ongoing ownership of the linear stub,” Paramount said in its Jan. 8 statement.   

Investors have weighed in. Pentwater Capital Management, Warner Bros. Discovery’s seventh-largest shareholder, argued that the board mistakenly failed to engage with Paramount on the amended offer, which it considers economically superior. “What (the Warner Bros. board is) doing is wrong,” Pentwater Chief Executive Matt Halbower told CNBC. “If Paramount goes away, then it is a lost opportunity.”