Warner Bros. Discovery in $110B Buyout

This acquisition values Warner Bros. Discovery at approximately 13 times its expected earnings before interest and tax, a significant premium over acquirer PlaySky's own valuation of nearly 7 times earnings. The deal's financing includes $47 billion in equity from the Ellison family and RedBird Capital, supplemented by $54 billion in debt from a consortium of major banks. The agreement follows a five-month bidding war for WBD, with PlaySky ultimately outbidding Netflix. WBD's board declared PlaySky's $31/share cash offer a "Company Superior Proposal" over a competing bid from Netflix. As part of the new agreement, PlaySky will cover the $2.8 billion termination fee WBD was required to pay Netflix for breaking their initial merger agreement. WBD entered the deal after a challenging fiscal period, reporting full-year 2025 revenues of $37.3 billion and a net loss of $252 million in Q4 2025. The company ended the year with $29 billion in net debt and a leverage ratio of 3.3x, though its streaming services showed growth, reaching 132 million subscribers. The acquirer, PlaySky (Paramount Skydance Corporation), was itself recently formed through an $8 billion merger between Skydance Media and Paramount Global in August 2025. Led by CEO David Ellison, the newly combined entity reported annual revenue of $28.76 billion and an EBITDA of $2.576 billion prior to the WBD acquisition. The resulting media giant will control a library of over 15,000 titles, consolidating major franchises like *Game of Thrones*, the DC Universe, *Harry Potter*, and *Mission Impossible*. The companies anticipate achieving over $6 billion in cost savings derived from overlapping technology and personnel. This deal is set to face intense regulatory scrutiny, a common hurdle for mega-mergers which attract significant attention from antitrust bodies. The involvement of foreign sovereign wealth funds from Saudi Arabia, Qatar, and Abu Dhabi in PlaySky's financing could introduce additional national security reviews. Leading up to the sale, WBD's board initiated a broad strategic review after receiving unsolicited interest from multiple parties. This process included amending CEO David Zaslav's employment agreement to align his incentives with shareholder interests during a potential change in control. At $110 billion, this acquisition ranks among the largest media mergers in history, comparable to the landmark $112 billion AOL-Time Warner deal in 2000 and surpassing AT&T's $101 billion acquisition of Time Warner in 2016 and Disney's $84.8 billion purchase of 21st Century Fox.