Paramount Skydance to Buy Warner Bros. Discovery in $110 Billion Deal, Creating New Hollywood Powerhouse

Paramount Skydance Corp. has agreed to buy Warner Bros. Discovery Inc. in an all-cash deal valuing the media company at about $110 billion including debt, a takeover that would unite two of Hollywood’s most storied studios and place a vast swath of U.S. news, sports and entertainment under one corporate roof.

The agreement, announced Feb. 27 in a joint news release and regulatory filings, follows a months-long bidding contest with Netflix Inc. and would rank among the largest media mergers ever attempted. Paramount will pay $31 in cash for each outstanding Warner Bros. Discovery share, an equity value of roughly $81 billion. Including Warner’s net debt and other obligations, the transaction implies an enterprise value of about $110 billion.

What the deal would combine

If completed, the merger would bring together:

• Warner Bros. and Paramount Pictures
• HBO and Showtime
• CNN and CBS News
• TNT Sports and CBS Sports
• Streaming services including Paramount+, Pluto TV, and the HBO Max and Discovery+ businesses

“Our pursuit of Warner Bros. Discovery has been guided by a clear purpose: to honor the legacy of two iconic companies while building a next-generation media company,” David Ellison, chairman and chief executive of Paramount Skydance, said in the announcement.

For Warner Bros. Discovery—formed in 2022 when Discovery acquired WarnerMedia from AT&T—the sale marks a sharp turn from a previously announced plan to sell its Warner Bros. studio and streaming assets to Netflix. The board reversed course after Paramount raised its bid and agreed to fund a multibillion-dollar breakup fee owed to Netflix.

“Our guiding principle has been to secure a transaction that maximizes the value of our iconic assets and our century-old studio while delivering certainty for investors,” Warner Bros. Discovery President and CEO David Zaslav said.

Timeline, fees and shareholder terms

Under the merger agreement, Paramount will acquire 100% of Warner Bros. Discovery in a direct merger, replacing an earlier hostile tender offer launched in December. Warner Bros. Discovery shareholders would receive $31 per share in cash at closing, which the companies expect in the third quarter of 2026, subject to regulatory approvals and a shareholder vote.

To compensate investors for potential delays, the agreement includes a “ticking fee”: if the transaction has not closed by Sept. 30, 2026, Warner Bros. Discovery shareholders will accrue an additional 25 cents per share per quarter, calculated daily, until closing.

Paramount also agreed to fund a $2.8 billion termination fee Warner Bros. Discovery owes Netflix for ending their prior merger agreement. In addition, Paramount committed to pay Warner Bros. Discovery a $7 billion reverse termination fee if regulators block the transaction on antitrust or similar grounds.

Financing and synergy claims

The takeover will be financed through a mix of new equity and debt. According to Paramount’s investor presentation, the Ellison family and investment firm RedBird Capital Partners have committed to provide about $47 billion of new equity at $16.02 per share in Class B stock, with the possibility of additional co-investors. Paramount also plans to offer existing shareholders rights to purchase up to $3.25 billion of new shares at the same price.

On the debt side, a banking group led by Bank of America and Citigroup, alongside Apollo Global Management, has committed roughly $54 billion in new financing, including refinancing of certain Warner Bros. Discovery facilities and additional borrowings to fund the cash consideration. Paramount also secured a $3.5 billion bridge to support its revolving credit facility.

Paramount projects the combined company will generate more than $6 billion in annual “run-rate synergies,” largely from consolidating technology platforms, eliminating overlapping corporate and back-office functions, and streamlining real estate and procurement. The company told investors it expects net debt to be about 4.3 times earnings before interest, taxes, depreciation and amortization once those savings are fully realized.

Ratings agencies and market reaction

Credit rating agencies have offered a more cautious view. Fitch Ratings downgraded Paramount Skydance and certain related entities to below investment grade shortly after the deal was announced, citing the transaction’s “highly complex” financing and the size of the combined debt load. Fitch said leverage and free cash flow could remain under pressure for longer than previously expected as Paramount integrates two large companies facing structural shifts in television and streaming.

Analysts at S&P Global and Moody’s also placed the company on negative outlook or review, warning that leverage could be significantly higher at closing and may only decline gradually if projected cost savings materialize.

Investors reacted unevenly. Warner Bros. Discovery shares climbed about 18% on Feb. 27, closing just below the $31 offer price, a typical discount reflecting the chance the deal fails to close. Paramount Skydance’s stock fell 7% to 9% in the days after the announcement and Fitch downgrade, trading below the $16.02 price at which the new equity is being issued to the Ellison-led group.

Why the companies say they need scale

The transaction comes amid an industry shakeout driven by accelerating cord-cutting, weak advertising markets and heavy losses in direct-to-consumer streaming. Major conglomerates—including Disney, Comcast’s NBCUniversal and Warner Bros. Discovery itself—have cut thousands of jobs and reduced original content spending in an effort to improve profitability.

Paramount argues that combining its assets with Warner Bros. Discovery’s will create a premier direct-to-consumer platform capable of competing more effectively with Netflix, Disney+ and Amazon’s Prime Video. The company has not yet detailed how it would integrate or rebrand Paramount+, Pluto TV, HBO Max and Discovery+, but has signaled it plans a unified global service anchored by premium scripted content, sports and news.

The combined library would include franchises such as “Star Trek,” “Mission: Impossible,” “Top Gun,” “SpongeBob SquarePants” and “Halo” from Paramount, and “Harry Potter,” “Game of Thrones,” DC Comics properties, “Looney Tunes” and “The Lord of the Rings” from Warner Bros. Ellison has said the company intends to maintain both Paramount and Warner Bros. as full-fledged studios, each releasing about 15 theatrical films a year.

Antitrust scrutiny and labor backlash

Antitrust regulators in the United States and abroad are expected to scrutinize the deal. In the U.S., the Department of Justice’s Antitrust Division will review the merger under the Hart-Scott-Rodino Act and other statutes. Competition authorities in Europe and other jurisdictions are likely to examine the combination’s impact on streaming markets, sports rights, pay-television carriage and content licensing.

The companies have not announced planned divestitures, but the breadth of the combined portfolio raises potential concerns for regulators. Paramount Skydance and Warner Bros. Discovery together would control a large share of U.S. scripted television production, a significant presence in premium streaming and major sports rights including the NFL and NBA through CBS and TNT-branded outlets. The deal would also consolidate news operations, bringing CNN and CBS News under one owner.

Labor unions and advocacy groups have already urged regulators to block the transaction. The International Brotherhood of Teamsters said the deal “could have devastating consequences for thousands of entertainment workers,” including 15,000 Teamsters members in the motion picture industry.

The Writers Guild of America warned that further consolidation reduces the number of buyers for film and television projects and undercuts bargaining power for writers and other creative professionals, particularly following the 2023 and 2024 strikes over streaming residuals, staffing levels and protections against artificial intelligence.

Anti-monopoly organizations have focused on broader economic and political implications. In a March analysis, the American Economic Liberties Project argued the deal would further entrench a handful of giant conglomerates that control much of the nation’s news and entertainment, with potential consequences for wages, consumer prices and democratic accountability.

The transaction also unfolds against a political backdrop in which the federal government’s approach to large mergers is closely watched. The Trump administration has generally signaled a more permissive stance toward corporate consolidation than the Biden administration, which sought to block several high-profile deals in other sectors. Technology executive Larry Ellison, whose family is providing a large portion of the equity financing, is an influential Republican donor, prompting some critics to question whether political considerations could affect the review.

What it could mean for viewers

For viewers, the merger could eventually change where and how popular shows and live events are available. A unified streaming platform could simplify access to content currently spread across multiple services. At the same time, consumer advocates warn that fewer major competitors in premium streaming and sports could lead to higher prices and fewer alternatives.

Paramount and Warner Bros. Discovery say the combination is necessary to adapt to a rapidly changing media landscape. Opponents argue it risks deep job cuts, reduced competition and an unprecedented concentration of cultural and informational power. Those questions now move to regulators and shareholders, who will decide in the coming months whether one of the biggest bets in Hollywood history goes forward.