Paramount to Acquire Warner Bros. Discovery

Paramount's acquisition of Warner Bros. Discovery (WBD) for $110 billion is expected to close in Q3 2026, pending regulatory and shareholder approvals. WBD shareholders will vote on the merger in early spring 2026. If the deal hasn't closed by September 30, 2026, WBD shareholders get an extra $0.25 per share each quarter until it closes. The deal is financed by $47 billion in equity from the Ellison Family and RedBird Capital Partners, plus $54 billion in debt commitments from Bank of America, Citigroup, and Apollo. New Class B Paramount stock will be issued at $16.02 per share as part of the equity commitments. Existing Paramount stockholders can participate in a rights offering of up to $3.25 billion of Class B Paramount stock at the same price. Paramount anticipates over $6 billion in synergies from the acquisition, driven by tech integration, corporate efficiencies, and streamlined operations. This values WBD at 7.5x 2026 EBITDA on a fully synergized basis. Post-closing, the combined company expects a net debt-to-EBITDA ratio of 4.3x, aiming for investment-grade credit metrics within three years. Netflix walked away from a prior agreement to acquire WBD, receiving a $2.8 billion termination fee. Paramount offered $31 per share in cash for WBD, which the WBD board deemed superior to Netflix's offer. Paramount also agreed to a $7 billion regulatory termination fee if the merger is blocked. The merger faces potential antitrust scrutiny, and state attorneys general are reviewing the deal. Concerns exist about market concentration, potential job losses, and the impact on the entertainment industry. The combined company will carry a significant debt load, potentially leading to cost-cutting measures.