It’s a Deal: Paramount and Warner Bros. Discovery Unveil $111 Billion Megamerger – The Hollywood Reporter
Paramount‘s $111 billion megadeal for Warner Bros. Discovery is officially a go.
The two companies formally unveiled the deal Friday after Netflix formally bowed out of the running a day earlier, citing a price that was “no longer financially attractive.”
Paramount mogul David Ellison said: “From the very beginning, our pursuit of Warner Bros. Discovery has been guided by a clear purpose: to honor the legacy of two iconic companies while accelerating our vision of building a next-generation media and entertainment company. 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 for what’s ahead.”
Warner Bros. Discovery CEO David Zaslav added, “I’m very pleased with the outcome we achieved for WBD shareholders and the entertainment industry. 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 for our investors. We look forward to working with Paramount to complete this historic transaction.”
The deal will see Paramount pay $31 per share for WBD, but it also had other elements, including a ticking fee payable to shareholders equal to $0.25 per quarter beginning after Sept. 30, 2026, as well as a $7 billion regulatory termination in the event the transaction does not close due to regulatory matters. The ticking fee means that the price of WBD will rise the longer the regulatory process takes.
The deal is backed by $47 billion in equity commitments from the Ellison family and RedBird Capital, and $54 billion in debt financing from Bank of America, Citigroup, and Apollo. Paramount added that “at closing, the equity may include other strategic and financial partners,” though it did not disclose those partners. Previous bids included funding from Middle East sovereign wealth funds, Tencent, and Jared Kushner’s Affinity Partners.
The company says it expects the deal to close in Q3 of this year, suggesting an aggressive timetable underscoring its regulatory confidence.
Paramount has also paid the $2.8 billion termination fee that Warner Bros. was required to pay to Netflix to abandon its signed deal, while the new deal would require WBD to pay Paramount $3 billion if it backs out of the deal in favor of a better offer.
California Attorney General Rob Bonta has already said they have an open investigation and intend to be “vigorous” in their review of the deal.
In announcing the deal officially, Paramount also made some commitments meant to assuage concerns from the town. For starters, the company says that it will maintain both Paramount and Warner Bros. as independent studios, with a commitment to 15 films from each every year, with full 45-day windows before going to premium video on-demand, with longer windows for hit films.
The company is also committing to continue selling its programming to third parties, and to be a buyer of content from other studios.
And Paramount reiterated its estimate that it can yield $6 billion in “synergies,” which it says will be “driven by a combination of: technology integration (such as migrating the combined company to a single enterprise resource planning system and consolidating streaming technology stacks), corporate-wide efficiencies, including procurement savings, optimizing the combined real estate footprint, and otherwise streamlining operational efficiencies.”
Of course, Hollywood is bracing for substantial layoffs following the deal close, though the announcement also suggests that other notable assets (do both Warners and Paramount need their own studio lots in L.A.?) may be sold.
“Warner Bros. is a world-class organization, and we want to thank David Zaslav, Gunnar Wiedenfels, Bruce Campbell, Brad Singer and the WBD Board for running a fair and rigorous process,” WBD co-CEOs Ted Sarandos and Greg Peters said in a statement Thursday. “We believe we would have been strong stewards of Warner Bros.’ iconic brands, and that our deal would have strengthened the entertainment industry and preserved and created more production jobs in the U.S. But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
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