Paramount agrees to buy Warner Bros. Discovery, pays Netflix $2.8 billion for breakup

Source: Engadget

Deal Overview

Paramount Skydance and Warner Bros. Discovery are officially merging. The studio paid Netflix the $2.8 billion termination fee it was owed for breaking its original deal to buy Warner Bros. earlier today, and the historic film studio has now formally accepted Paramount’s offer. The transaction values Warner Bros. Discovery at $31 per share and is slated to close by Q3 2026.

Regulatory and Operational Commitments

To address regulator and industry concerns, Paramount has made several commitments:

• The combined company will produce 30 theatrical films annually.
• Each theatrical release will have a minimum 45‑day window in cinemas before being made available on video‑on‑demand (a condition Netflix also agreed to).
• The deal includes a daily ticking fee of $0.25 per share per quarter beginning after September 30 2026 if the transaction is delayed.
• If the merger is terminated for regulatory reasons, Paramount must pay $7 billion to Warner Bros. Discovery.

Financial Terms

• Termination fee to Netflix: $2.8 billion.
• Purchase price: $31 per share of Warner Bros. Discovery.
• Potential regulatory penalty: $7 billion payable by Paramount if the deal is blocked.
• Post‑closing ticking fee: $0.25 per share per quarter after September 30 2026.

Background and Competition

Netflix and Paramount were competing for different portions of Warner Bros. Discovery:

• Netflix sought primarily the Warner Bros. film studio.
• Paramount Skydance aimed to acquire the entire company, including its cable networks and ancillary assets.

Warner Bros. Discovery announced that Paramount’s offer was superior to Netflix’s on Thursday. Netflix subsequently declined to submit a counter‑offer, effectively abandoning its prior agreement.

Potential Challenges

The merger must still clear regulatory scrutiny:

• U.S. regulators will review the deal for antitrust concerns.
• International regulators and state‑level authorities, such as California Attorney General Rob Bonta, are also expected to examine the transaction.
• The close relationship between Paramount CEO David Ellison, his father Larry Ellison, and the Trump administration has been cited as a factor that could ease U.S. regulatory hurdles, but foreign and state reviews remain likely.

This article originally appeared on Engadget:
Paramount agrees to buy Warner Bros. Discovery, pays Netflix $2.8 billion for breakup