Paramount moves to acquire Warner Bros. Discovery for $111 billion

It now looks like Paramount is the winner of the bidding war to acquire Warner Bros. Discovery (WBD) with a $111 billion bid, ending a bidding war for the US company. The development comes after Netflix declined to increase its previous $82.7 billion offer for WBD’s studios and streaming business and withdrew from negotiations. Paramount’s offer, which awaits formal approval from WBD’s board of directors, would acquire all of WBD’s assets. Previously, the WBD board had rejected Paramount’s initial bid of approximately $108 billion, citing concerns over Paramount’s “heavy debt load” and the involvement of state-owned investment funds (sovereign wealth funds).

To secure the deal, Paramount sweetened its proposal in February by offering a final bid of $31 per share. It also agreed to pay a $2.8 billion breakup fee—a fee paid if a party backs out of a deal—if WBD withdrew from its Netflix agreement, alongside a $0.25 per share ticking fee—a fee paid to shareholders for each quarter a deal fails to close—if the transaction does not close by December 31, 2026.

The financial structure of the proposed acquisition includes:

• Assumed Debt: Paramount will assume approximately $33 billion of WBD’s existing debt, adding to its own liabilities to create a combined company debt burden of $87 billion.
• Debt Commitments: A $54 billion debt commitment provided by Bank of America, Merrill Lynch, Citi, and Apollo Global Management.
• Equity: $45.7 billion in equity funding provided by Larry Ellison.

The transaction faces regulatory and political hurdles in California and across the US. California Attorney General Rob Bonta announced an open investigation into the merger on February 26, stating that “these two Hollywood titans have not cleared regulatory scrutiny — the California Department of Justice has an open investigation, and we intend to be vigorous in our review.”

Beyond antitrust concerns, the deal has drawn scrutiny due to the leadership of David Ellison, a “controversial figure” who has warned about significant job reductions. Additionally, his ownership of CBS News has been characterized as “sympathetic and supportive of the administration of Donald Trump.” Under Ellison, CBS News—led by “conservative provocateur” Bari Weiss—has faced scrutiny over coverage critical of the Trump administration. Trump, who “personally sought concessions from news divisions critical of him” (including a $16 million CBS settlement), had also pressured Netflix to fire former Biden White House official Susan Rice from its board before Netflix withdrew its $27.75 per share all-cash offer.

Why it matters

The potential acquisition represents massive media consolidation, with significant implications for debt, market competition, and regulatory scrutiny as the industry faces declining cable viewership and streaming competition.