Warner Bros. Discovery signs merger agreement with Paramount Skydance

Warner Bros. Discovery on Friday formally signed an agreement to be acquired by Paramount Skydance, the two companies announced, setting the stage for one of the most consequential media mergers in recent history.

The deal was inked just a day after Netflix abruptly announced it was pulling out of the bidding war for Warner Bros. Discovery’s studio and streaming assets, effectively closing the curtains on a corporate battle that had riveted Hollywood.

Paramount Skydance’s offer of $31 share values WBD at roughly $77 billion and includes the Warner Bros. film studio, the HBO Max streaming platform and a portfolio of cable channels, including CNN. Netflix’s proposal did not include the 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, with a vote expected in the early spring. If the transaction has not closed by Sept. 30, WBD shareholders will receive a $0.25 a share “ticking fee” for each quarter.

The deal still needs to be approved by Justice Department, and it 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 encompass a sprawling library of intellectual property that ranges from “The Godfather” and SpongeBob Squarepants (Paramount) to “Casablanca” and Batman (WBD).

Paramount Skydance is led by David Ellison, the son of Silicon Valley titan Larry Ellison, a close ally of President Donald Trump. The younger Ellison’s Skydance Media acquired Paramount Global last year in an $8 billion deal.

“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,” Ellison said in a statement.

The 43-year-old executive pursued the WBD assets even after the company signed a $72 billion deal with Netflix. WBD rejected several offers from Paramount Skydance before Ellison on Thursday boosted the purchase price from $30 to $31 a share.

In a stunning move hours later, Netflix announced it would not match Paramount Skydance’s latest offer. Netflix co-CEOs Ted Sarandos and Greg Peters said that “this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”

Netflix is not walking away empty-handed, however. Paramount Skydance paid Netflix a $2.8 billion termination fee, according to a Securities and Exchange Commission filing.

David Zaslav, the president and chief executive of WBD, said he was “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,” Zaslav said. “We look forward to working with Paramount to complete this historic transaction.”

Paramount Skydance has not yet provided specifics on how its properties would be combined with those of WBD. It remains unclear whether Ellison will combine CNN and the 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 he would not be “involved” in the proceedings. Then, last week, he warned Netflix it would “pay the consequences” if it did not fire board member Susan Rice, a former Biden administration official.

Trump has not yet publicly commented on the potential merger between WBD and Paramount Skydance.

Ellison and Sarandos were both in Washington this week. Ellison attended the State of the Union address as a guest of Sen. Lindsey Graham, R-S.C., according to a photo on X. Sarandos met with White House staff Thursday afternoon.

Meanwhile, rank-and-file employees in America’s movie capital appear to be bracing for an Ellison era.