Paramount to Acquire Warner Bros. Discovery
Paramount has agreed to acquire Warner Bros. Discovery in a $110 billion all-stock deal, creating a new media giant. The move ends months of speculation and beats out a competing bid from Netflix. The combined entity aims to challenge Disney and Amazon by merging streaming platforms like Paramount+ and Max with iconic content libraries from HBO, CBS, and CNN.
The deal values Warner Bros. Discovery at an enterprise value of $110 billion, or approximately 7.5 times its projected 2026 earnings before interest, taxes, depreciation, and amortization (EBITDA) after accounting for synergies. The transaction is structured as an all-cash deal at $31.00 per share, with Paramount securing $47 billion in equity financing from the Ellison family and RedBird Capital Partners, and $54 billion in debt commitments from Bank of America, Citigroup, and Apollo. To protect shareholder value against delays, the agreement includes a "ticking fee" of $0.25 per share per quarter that will be added to the purchase price if the deal doesn't close by September 30, 2026. Paramount has also committed to a significant $7 billion regulatory termination fee and covered the $2.8 billion breakup fee WBD owed to Netflix from their previous agreement. A formidable team of financial advisors is behind the deal. Centerview Partners and RedBird Advisors acted as lead advisors to Paramount, with Bank of America, Citi, M. Klein & Company, and LionTree also providing financial advice. Warner Bros. Discovery was advised by Allen & Company, J.P. Morgan, and Evercore. The acquisition is expected to generate over $6 billion in synergies. These savings are anticipated from consolidating streaming technology, integrating corporate systems, optimizing real estate, and streamlining overall operations. The combined entity aims to have a net debt-to-EBITDA ratio of 4.3x at closing, with a goal of returning to investment-grade credit metrics within three years. This merger marks a significant moment for key executives like Warner Bros. Discovery CEO David Zaslav, known for his role in the Discovery and WarnerMedia merger, and Shari Redstone, whose family has controlled Paramount for decades. The deal signals a strategic pivot for Redstone and a continued consolidation play by Zaslav. The road ahead includes significant regulatory scrutiny from the Department of Justice and potentially international bodies, as the merger reduces the number of major Hollywood studios. The involvement of three Middle Eastern sovereign wealth funds in Paramount's financing could also attract regulatory attention. The Hart-Scott-Rodino antitrust waiting period expired on February 19, 2026, a key step in the regulatory process.
