Paramount to Acquire Warner Bros. Discovery in Landmark Deal
The intense bidding war for Warner Bros. Discovery has concluded, with David Ellison-owned Paramount emerging as the victorious bidder. The multi-billion dollar acquisition promises to reshape the media landscape, bringing iconic studios, the HBO brand, and the CNN news network under Ellison's ownership.
Warner Bros. Discovery announced on Thursday that Paramount Skydance's latest offer of $31 per share constituted a "superior proposal," granting Netflix a four-day window to respond. However, Netflix confirmed it would not increase its previous all-cash bid of $82.7 billion, choosing instead to withdraw from the pursuit.
"The transaction we negotiated would have created shareholder value with a clear path to regulatory approval," stated Netflix co-CEOs Ted Sarandos and Greg Peters. "However, we’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid."
Under the terms of the initial agreement, Warner Bros. Discovery is obligated to pay Netflix a termination fee of $2.8 billion. Paramount's revised offer, notably backed by Larry Ellison, the father of David Ellison and executive chairman of Oracle, includes covering this breakup fee.
This new agreement will see Paramount, which itself was acquired by Skydance Media last year with substantial financial backing from Larry Ellison, take full control of Warner Bros. Discovery. This encompasses its film and television studios, the HBO streaming service, its gaming and entertainment divisions, and linear television networks such as CNN, TBS, TNT, Discovery, and HGTV.
Ellison, whose existing portfolio includes major studios and news businesses, has indicated that significant job cuts are anticipated. His ownership of CBS News has previously drawn scrutiny, with some reporting suggesting a sympathetic stance towards the Trump administration and increased oversight of critical coverage.
Netflix had initially signaled its intention to acquire Warner Bros. Discovery in December, proposing nearly $83 billion for its studio and streaming assets alone. Despite competing bids from Paramount, Warner Bros. Discovery had previously advised shareholders that Netflix's offer was superior to Paramount's initial $108 billion proposal for the entire company. Paramount's latest bid values Warner Bros. Discovery at approximately $111 billion.
Paramount will also assume the approximately $33 billion in debt held by Warner Bros. Discovery. Larry Ellison, with a net worth reported at $201 billion, has committed to providing the necessary equity to complete Paramount's bid. Paramount's current market capitalization stands around $12 billion.
The acquisition is further supported by a $57.5 billion debt commitment from financial institutions including Bank of America Merrill Lynch, Citi, and Apollo Global Management.
Following the announcement, Netflix shares saw a notable increase of up to 10% in after-hours trading, while Paramount shares rose by 4.5%.
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