Warner Bros. Discovery on Friday formally signed an agreement to acquire Paramount Skydance, setting the stage for the most effective media merger in recent history between the two companies.
The deal was signed just one day after Netflix abruptly announced it was withdrawing from a bidding war for Warner Bros. Discovery’s studio and streaming assets, effectively ending a corporate war that has shaken Hollywood.
Paramount Skydance’s offer of $31 a share values WBD at approximately $77 billion and includes a portfolio of cable channels including the Warner Bros. film studio, HBO Max streaming platform and CNN. Netflix’s proposal does not include cable assets.
The takeover bid, factoring in WBD’s debt load, comes to a total of more than $110 billion.
The transaction was unanimously approved by the boards of directors of both media giants, the companies said in a joint news release, and a vote is expected in early spring. If the transaction does not close by September 30, WBD shareholders will receive a “ticking fee” of $0.25 per share per quarter.
The deal still needs to be approved by the Justice Department and will be reviewed by European Union regulators. Democrats in Congress have also vowed to scrutinize the transaction. Paramount Skydance’s proposal for WBD includes a $7 billion reverse termination fee if regulators block the deal.
If approved, the merger would unite two storied Hollywood film studios and include an expansive library of intellectual property ranging from “The Godfather” and SpongeBob SquarePants (Paramount) to “Casablanca” and Batman (WBD).
Paramount Skydance is headed by David Ellison, son of Silicon Valley titan Larry Ellison, a close ally of President Donald Trump. The younger Ellison’s Skydance Media acquired Paramount Global in an $8 billion deal last year.
“By bringing together these world-class studios, our complementary streaming platforms and the extraordinary talent behind them, we will create even greater value for audiences, partners and shareholders – and we couldn’t be more excited about what’s coming next,” Ellison said in a statement.
The 43-year-old executive pursued WBD assets even after the company signed a $72 billion deal with Netflix. WBD rejected several offers from Paramount Skydance before Ellison raised the purchase price from $30 to $31 on Thursday.
Hours later, in a stunning move, Netflix announced that Paramount would not be matching Skydance’s latest offering. Netflix co-CEOs Ted Sarandos and Greg Peters said, “This transaction is always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
However, Netflix is not walking away empty-handed. Paramount Skydance paid Netflix a $2.8 billion termination fee, according to a Securities and Exchange Commission filing.
“We are very pleased with the results we have achieved for WBD shareholders and the entertainment industry,” said David Zaslau, president and chief executive of WBD.
“Our guiding principle throughout this process has been to secure a transaction that maximizes the value of our iconic assets and our century-old studio while delivering as much certainty as possible to our investors,” Zaslau said. “We look forward to working with Paramount to complete this historic transaction.”
Paramount has yet to provide specifics on how SkyDance will integrate its properties with WBD. It’s unclear whether Ellison will combine CNN and Paramount-owned CBS News into a single news organization, for example.
Trump, who at one point said he might weigh in on the deal, told NBC News in early February that he would “not be involved” in the inquiry. Then, last week, he warned Netflix that it would “pay the consequences” if it didn’t fire board member Susan Rice, a former Biden administration official.
Trump has yet to publicly comment on a potential merger between WBD and Paramount Skydance.
Both Ellison and Sarandos were in Washington this week. Sen. Ellison’s State of the Union address. Lindsay Graham, RSC guest attends, as per photo in Ex. Sarandos met with White House staff Thursday afternoon.
Meanwhile, rank-and-file employees in America’s film capital are bracing for the Ellison era.
