Paramount is set to acquire Warner Bros. Discovery in a $110 billion deal as Netflix withdraws from the competition

Warner Bros. Discovery has agreed to be acquired by Paramount Skydance in a $110 billion deal, concluding a high-stakes bidding war after Netflix withdrew from its agreement with the HBO Max owner.

The companies announced on Friday that they expect the $81 billion equity deal to close in the third quarter of 2026. Earlier in the day, Reuters reported on a deal signed between Warner Bros. Discovery and Paramount, referencing an audio clip from a global town hall conducted by the company.

The merger would establish a formidable media entity, uniting prominent studios and networks like CNN and CBS to enhance their competitive stance, as streaming has disrupted the industry by attracting viewers away from conventional linear TV.

The merged entity will feature a film library exceeding 15,000 titles, including well-known franchises like “Game of Thrones,” “Mission Impossible,” “Harry Potter,” and the DC Universe, according to a statement from the companies.

On Thursday, Netflix chose not to accept Paramount’s recent offer of $31 per share, which Warner Bros. considered to be better than the streaming pioneer’s agreement of $27.75 per share for its studio and streaming assets.

On Saturday, Warner Bros. obtained the contracts from Paramount, and after two days of continuous negotiations, it determined that Paramount’s offer was more favorable, as reported by a source familiar with the discussions.

Warner Bros. has yet to provide a response to a request for comment from Reuters.

Paramount’s shares rose approximately 3% in after-hours trading, whereas Netflix’s stock declined by 1%.

Shareholders of Warner Bros. are anticipated to cast their votes on the proposed merger in early spring of 2026, as stated by the companies.

The acquisition will be financed through $47 billion in equity provided by the Ellison Family and RedBird Capital Partners, alongside further debt commitments totaling $54 billion from Bank of America, Citigroup, and Apollo. Paramount is set to initiate a rights offering of up to $3.25 billion in Class B stock for its current shareholders.

Paramount and Warner Bros. announced their anticipation of over $6 billion in savings, attributed to technology integration, corporate efficiencies, and the streamlining of operations.

Paramount has successfully secured the winning bid for Warner Bros Discovery, yet the merger has attracted considerable scrutiny. California regulators are gearing up for a thorough examination of the $110 billion deal, which has the potential to transform Hollywood.

Paramount, under the leadership of David Ellison, the son of billionaire Larry Ellison, possesses significant political ties to the Trump administration, which some analysts suggest may facilitate more favorable treatment for the company.

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

Since late last year, Paramount has actively sought to acquire Warner Bros., initiating a determined campaign to take the company from the streaming giant by persistently increasing its offer.

The company, led by David Ellison, the son of billionaire Larry Ellison, drew Warner’s board back to negotiations by suggesting the potential for a better cash offer.

In its updated proposal, Paramount increased the termination fee it would incur if the deal does not receive regulatory approval to $7 billion, up from $5.8 billion.

Paramount has settled the $2.80 billion termination fee that Warner Bros. owed to Netflix, as stated in a regulatory filing on Friday. “Netflix emerges as the clear victor in the Warner Bros. Discovery sweepstakes. ” Paramount pays a termination fee to Netflix. According to eMarketer analyst Ross Benes, Netflix’s initiation of a bidding war has increased the financial obligations for Paramount, leading to greater debt for Paramount-WBD.

‘EU ANTITRUST APPROVAL LIKELY NOT A HURDLE’

Paramount is anticipated to secure European Union antitrust approval without difficulty, with any necessary divestments expected to be minimal, according to a report by Reuters on Friday, referencing sources.

The agreement represents one of the most significant transformations in Hollywood, resulting in the formation of one of the largest film studios globally. This will enable Paramount to access Warner’s extensive collection of intellectual property, featuring franchises like “Fantastic Beasts” and “The Matrix.”

The new company has committed to sustaining both studios and producing at least 30 theatrical films each year.

Lawmakers from both political parties have expressed concerns that any agreement to acquire Warner Bros. might lead to reduced options and increased prices for consumers.

Cinema operators express concerns that the merger of large Hollywood studios may lead to job losses and a decrease in the number of films released in theaters.

The absence of competition would spell disaster for writers, consumers, and the entire entertainment industry. “This merger must be blocked,” stated the Writers Guild of America, a union that represents thousands of television and film writers, as well as other media workers.