Warner Bros Discovery (WBD) has told shareholders to reject a hostile US$108.4 billion (A$164bn) takeover bid from Paramount Skydance, escalating one of the biggest corporate battles Hollywood has seen in years.

In a sharply worded letter to investors, the WBD board labelled Paramount’s US$30-per-share cash offer “inferior” and “inadequate”, urging shareholders instead to back its recently announced deal with Netflix.

That agreement would see Netflix acquire Warner Bros’ film and TV studios, HBO and its streaming business, while WBD spins off legacy cable networks such as CNN and TNT into a separate company.

The board accused Paramount, which is controlled by Oracle billionaire Larry Ellison and his son David, of “consistently misleading” investors about the certainty of its financing.

It said Paramount had failed to provide a full and unconditional backstop from the Ellison family, relying instead on what it described as an “opaque revocable trust” and a complex funding structure that could be withdrawn.

Warner Bros also warned that a Paramount takeover would saddle the combined group with heavy debt, potentially approaching seven times earnings, creating what it called a “risky capital structure” vulnerable to even modest market shocks.

The board added that accepting Paramount’s bid would trigger a US$2.8 billion break-up fee payable to Netflix.

Paramount hit back, reaffirming its offer and arguing it provides “superior value and certainty” compared with the Netflix deal.

Paramount CEO David Ellison said the company had received encouraging feedback from WBD shareholders and remained committed to completing the transaction.

For the global tech and media sector, the fight highlights how traditional studios are increasingly becoming takeover targets for deep-pocketed tech players.

Netflix, now valued at more than US$400 billion, has positioned its bid as simpler and more certain, with no need for external equity financing.

WBD shares slipped about 2% overnight in New York, while Paramount stock fell more than 4%.

A shareholder vote on the Netflix deal is expected next year.