Paramount Skydance to Acquire Warner Bros. Discovery in $111 Billion Landmark Deal

The proposed merger would combine two of Hollywood's five major studios, creating a media powerhouse with over 200 million streaming subscribers.

Paramount Skydance is positioned to acquire Warner Bros. Discovery (WBD) in a transaction valued at approximately $111 billion, following a competitive bidding process that concluded with Netflix withdrawing its rival offer. The proposed merger, which would combine two of the five major Hollywood studios and their extensive media assets, is subject to regulatory approval and a shareholder vote.

Acquisition Agreement and Competing Bids

The acquisition process began in September 2025 when Paramount Skydance expressed interest in acquiring WBD. WBD initiated a formal sale process in October, attracting multiple potential buyers. On December 5, 2025, WBD announced an agreement to sell its film studio and streaming assets to Netflix for $27.75 per share.

Paramount subsequently submitted a hostile bid directly to WBD shareholders, initially offering $30 per share for the entire company, including its television networks. In late February 2026, Paramount increased its offer to $31 per share and included a regulatory termination fee of $7 billion. Paramount also agreed to pay the $2.8 billion breakup fee WBD would owe to Netflix.

On February 26, 2026, the WBD board determined Paramount's revised proposal was a "superior proposal" under the terms of the Netflix agreement. Netflix declined to increase its bid, stating the deal was "no longer financially attractive" at the price required to match Paramount's offer. Netflix collected the $2.8 billion termination fee.

Netflix co-CEO Ted Sarandos described the bidding process as one that "built our M&A muscle" and "tested our investment discipline."

Deal Terms and Structure

Paramount's offer of $31 per share is an all-cash transaction for 100% of Warner Bros. Discovery. The agreement includes shareholder protections such as a "ticking fee" of 25 cents per share per quarter if the deal does not close by September 30, 2026.

Key financing details:

• The Ellison Trust has committed $45.7 billion in equity
• Financing provided by Bank of America Merrill Lynch, Citi, and Apollo Global Management
• Three sovereign wealth funds are contributing approximately $24 billion:
  • Saudi Arabia's Public Investment Fund (~$10 billion)
  • Qatar Investment Authority
  • Abu Dhabi's L'imad Holding Co.
• An FCC filing reveals the merged entity will be 49.5% owned by foreign investors.

Financial and Strategic Plans

Paramount CEO David Ellison has stated that the combined entity, pending regulatory approval, will produce a minimum of 30 films per year—15 from each studio. Each film will receive a full theatrical release with a minimum 45-day exclusive window.

"We are pro-competition," Ellison stated, arguing the merger will "strengthen competition by creating a more capable and effective rival to the dominant platforms."

Ellison confirmed intentions to maintain Paramount and Warner Bros. as stand-alone operations and to preserve the HBO brand with its independent creative leadership.

Streaming integration: The company has outlined plans to integrate HBO Max and Paramount+ into a single streaming service, aiming for a combined subscriber base of over 200 million.

Cost synergies: The merger is expected to generate approximately $6 billion in cost synergies. Paramount has stated these will primarily be achieved through non-personnel measures, though WBD's board has raised concerns about potential workforce reductions.

Regulatory Review and Legal Proceedings

The proposed acquisition is subject to review by regulatory authorities in the United States and Europe.

• U.S. Department of Justice is conducting an antitrust review. The head of its antitrust division stated the review will "absolutely not" be fast-tracked due to political factors.
• California Department of Justice has an open investigation into the merger.
• United Kingdom's Competition and Markets Authority announced a Phase 1 investigation.

Warner Bros. Discovery has scheduled a special shareholders meeting on April 23, 2026, to vote on the transaction. Institutional Shareholder Services (ISS) has recommended shareholders approve the deal.

Executive Compensation

According to a WBD proxy filing, CEO David Zaslav's estimated compensation package in connection with the merger has been valued at over $550 million, including cash severance and equity in the combined company. A tax reimbursement program could add up to an estimated $335 million, though this amount may decrease. ISS has recommended shareholders not approve Zaslav's proposed exit package.

WBD CEO David Zaslav expressed excitement about "the potential of a combined Paramount Skydance and Warner Bros. Discovery."

Industry Response and Professional Opposition

More than 2,000 film and television industry professionals have signed an open letter opposing the merger. Signatories include:

• Bryan Cranston
• Jane Fonda
• Joaquin Phoenix
• J.J. Abrams
• Denis Villeneuve
• Ben Stiller

The letter, organized by the Committee for the First Amendment and the Future Film Coalition, argues the merger would further consolidate the media landscape, reduce competition, and lead to fewer opportunities for creators and fewer jobs.

The letter states the merger would reduce the number of major U.S. film studios to four.

Jane Fonda, through the Committee for the First Amendment, warned the merger "would be one of the most destructive threats to free speech and creative expression in our history."

In contrast, Adam Aron, CEO of AMC Theatres, expressed support for the merger, citing David Ellison's commitment to increasing film production and the 45-day theatrical window. Aron stated he is "the most optimistic" about the business in six years.

Background: The Bidding War

Netflix initially secured a deal to acquire WBD's studio and streaming assets for $27.75 per share. The company characterized the acquisition as a "vertical merger" intended to add assets and increase production, distinguishing it from the "horizontal merger" it said occurred with Disney-Fox.

After Paramount's hostile bid, WBD granted a seven-day waiver from the Netflix agreement to re-engage with Paramount. Netflix subsequently declined to match Paramount's increased $31 per share offer. Netflix co-CEOs Ted Sarandos and Greg Peters stated the transaction was considered a "nice to have" at the right price. Following the withdrawal, Netflix shares increased by over 10% in after-hours trading.

Netflix's First Quarter 2026 Financial Performance

Netflix reported first-quarter 2026 revenue of $12.25 billion (16% year-over-year increase) and diluted earnings per share of $1.23, exceeding analyst expectations of $0.76 per share. The profit figure included the $2.8 billion termination fee.

Netflix's co-founder and former CEO Reed Hastings announced he will leave the company's board of directors later this year. The company's shares declined approximately 10% in after-hours trading following the earnings release.