Paramount to buy Warner Bros Discovery in $110bn deal

Warner Bros Discovery has agreed to be acquired by Paramount Skydance in a $110 billion (€93 billion) deal, ending a high-stakes bidding war after Netflix walked away from its agreement with the HBO Max owner.

The deal, with an equity value of $81 billion, is expected to ⁠close in the third quarter of 2026, the companies said.

Reuters first reported on Warner Bros Discovery and Paramount signing a deal earlier in the day, citing an audio clip of a global town hall held by the company.

On Thursday, Netflix declined to match Paramount's latest $31-per-share offer, which Warner Bros deemed superior to the streaming pioneer's $27.75-per-share agreement for its studio and streaming assets.

"Netflix had the legal right to match the PSKY offer. As you all know, they ultimately decided not to do that. That then resulted in a signed agreement with PSKY as of this morning. So that's where everything stands," Bruce Campbell, Warner Bros' chief revenue and strategy officer, said in the town hall.

Shares of Paramount were up 1% in extended trading, while those of Warner Bros and Netflix were flat.

The acquisition will be funded by $47 billion in equity from the Ellison Family and RedBird Capital Partners, with additional debt commitments of $54 ‌billion from Bank of America, Citigroup and Apollo.

Paramount also ⁠plans a rights offering of up to $3.25 billion of Class B stock for existing shareholders.

Paramount and Warner Bros said they expect more than $6 billion in savings, driven by technology integration, corporate efficiencies and streamlining operations.

The merged company will boast a film library of over 15,000 titles and popular franchises such as 'Game of Thrones,' 'Mission Impossible,' 'Harry Potter,' and the DC Universe, the companies said in a statement.

While Paramount has won the bidding war for Warner Bros Discovery, the merger has drawn scrutiny.

California regulators are preparing a vigorous review of the $110 billion deal, which could reshape ‌Hollywood.

California State Attorney General Rob Bonta said that California is already investigating the deal and ⁠will be "vigorous" in its review.

'EU antitrust approval likely not a hurdle'

Paramount is expected to easily win European Union antitrust approval, with any required divestments likely to ‌be minor, Reuters reported yesterday, citing sources.

The deal is among Hollywood's biggest media shake-ups and will create one of the ⁠largest film studios in ‌the world, allowing Paramount to tap Warner's trove of intellectual property, including franchises such as 'Fantastic Beasts' and 'The Matrix'.

It will also allow Paramount to bolster its streaming efforts, with a potential combination of HBO Max and Paramount+, enabling it to gain market share and tussle with market leader Netflix.

Paramount was in pursuit of Warner Bros since late last year when it launched a hostile campaign to wrestle the company from the ⁠streaming giant by consistently raising its offer.

The company enticed Warner's board back to the bargaining table by raising the possibility of an ⁠improved cash offer.

In its revised bid, Paramount raised the termination fee it would pay should the deal fail to gain regulatory approval to $7 billion from $5.8 billion.

Paramount paid the $2.80 billion termination fee that Warner Bros owed Netflix, the streaming giant said in a regulatory filing yesterday.

Activist investor Ancora Holdings, which owns a small stake in Warner Bros, had also stepped up pressure on the HBO owner to engage more with Paramount.

Politicians on both sides of the political aisle have raised concerns that any deal to acquire Warner Bros could result in fewer choices and higher prices for consumers.

Cinema operators are also concerned that combining large Hollywood studios could cost jobs and reduce ‌the number of movies released in theatres.