What broke yesterday is now official. Paramount Skydance and Warner Bros. Discovery announced that the two parties have entered a definitive merger agreement. WBD investors will receive a $31 per share price for their vote.
The Warner Bros. Discovery board previously approved a deal with Netflix on Dec. 5 for just Warner Bros. Pictures, HBO, Warner Bros. Television, and the historic WB lot in Burbank, CA. The remaining cable companies were to be spun off into a separate holding company. Paramount’s latest hostile offer, which was deemed “superior” by the WBD board, saw Netflix decide not to match, deciding WBD would have been nice to have, but was not a necessity. They received a $2.8 billion breakup fee, which the company confirmed it already received from Paramount today.
In their release, Paramount hyped that “the merger unlocks innovative and compelling storytelling opportunities across the combined company’s best-in-class film and television studios, streaming and linear platforms.” They insist the new media entity “will deliver greater choice for consumers through its leading streaming platforms with an exceptional intellectual property portfolio that has produced popular franchises such as ‘Game of Thrones,’ ‘Mission Impossible,’ ‘Harry Potter,’ ‘Top Gun,’ the DC Universe, and ‘SpongeBob SquarePants.’“
Additionally, Paramount Skydance has promised 30 theatrical releases a year on a minimum 45-day window, with an extended 60-90 day window depending on the title. Netflix had also committed to a 45-day window, including in front of a congressional hearing. Many in the industry and distribution are questioning whether a combined entity can release 30 films a year in 2026.
In a statement, David Ellison, Chairman and CEO of Paramount, a Skydance Corporation, noted, “From the very beginning, our pursuit of Warner Bros. Discovery has been guided by a clear purpose: to honor the legacy of two iconic companies while accelerating our vision of building a next-generation media and entertainment company. By bringing together these world-class studios, our complementary streaming platforms, and the extraordinary talent behind them, we will create even greater value for audiences, partners and shareholders — and we couldn’t be more excited for what’s ahead.”
Additionally, David Zaslav, President and CEO of Warner Bros. Discovery, added: “I’m very pleased with the outcome we achieved for WBD shareholders and the entertainment industry. Our guiding principle throughout this process has been to secure a transaction that maximizes the value of our iconic assets and our century-old studio while delivering as much certainty as possible for our investors. We look forward to working with Paramount to complete this historic transaction.”
Zaslav’s statement came after a short company town hall this morning that, from all accounts, did not go over well. During the in-person and teleconference meeting, he told employees, “If it doesn’t close, we get $7 billion and get back to work.” While U.S. government regulators will likely approve the merger because of close ties between Ellison and the Trump Administration, others are lobbying against it.
Industry unions such as the WGA, theater owners (under trade organization Cinemas United), and the CA Attorney General, Rob Bonta, have already come out against the merger for differing reasons. Bonta replied to Mark Ruffalo on social media this morning, revealing he is forming a coalition of blue-state AG’s to investigate the merger and that “California has a special interest in protecting competition.” Additionally, European regulators will have their own concerns over the acquisition, especially after the Trump administration’s involvement.
Whether any of these actions can slow down the merger remains to be seen. The current plan is for a WBD investor vote in the early spring and for the deal to close within six to nine months in the third quarter of 2026.
The deal is financed by $47 billion in equity, fully backed by the Ellison Family and RedBird Capital Partners. An additional $54 million will be a loan that the combined entity will have to pay off to Bank of America, Citigroup, and Apollo. This will result in $39 billion of incremental new debt for the combined company. If you remember all the layoffs at WBD a few years ago, it was when that new entity was doing its best to pay off over $40 million in debt. This will be deja vu for all involved.
Paramount previously said it saw $6 billion in cost savings with a merger between the two companies. Others believe the company will need to clear $16 billion in savings to meet its payments. Either scenario will lead to a massive number of layoffs that may dwarf the cuts at Paramount and WBD previously.
Paramount will conduct a conference call and webcast on Monday, March 2, at 8:30 AM ET to discuss its merger agreement.
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