Paramount to buy Warner Bros. Discovery

Paramount to buy Warner Bros. Discovery

Paramount Skydance Corporation (NASDAQ: PSKY) has agreed to acquire Warner Bros. Discovery, Inc. (NASDAQ: WBD) in a $111 billion transaction, forming a consolidated media and entertainment entity. Under the terms, Paramount will pay $31.00 per share in cash for all outstanding WBD shares, valuing the target at $81 billion in equity and $110 billion in enterprise value. The deal includes a "ticking fee" of $0.25 per share for each quarter until closing, if delayed beyond September 30, 2026.

The merger combines Paramount's Paramount+, CBS, and Showtime with WBD's HBO Max, CNN, and Discovery Channel, creating a platform with over 15,000 film titles and extensive sports rights, including NFL, Olympics, and UFC. Strategic benefits include enhanced direct-to-consumer (DTC) capabilities, with synergies projected to exceed $6 billion through technology integration, procurement efficiencies, and real estate optimization. The combined entity aims to produce 30 theatrical films annually and maintain 45-day theatrical windows before VOD releases.

Financing involves $47 billion in equity, fully backed by the Ellison Family and RedBird Capital Partners, and $54 billion in debt from Bank of America, Citigroup, and Apollo. Existing Paramount shareholders may participate in a $3.25 billion rights offering. Post-merger, the company's net debt-to-EBITDA is expected to be 4.3x, with a path to investment-grade credit metrics within three years.

The transaction requires regulatory approvals and WBD shareholder votes, anticipated in early 2026. Completion is targeted for Q3 2026. Risks include antitrust hurdles, subscriber churn, and integration challenges, as highlighted in filings by both companies. The deal reflects a broader trend of consolidation in the streaming sector, aiming to counter competition from Netflix and emerging platforms.