Warner Bros. Discovery has just jilted Netflix after receiving what it calls a “superior offer” from Paramount.
WBD and Netflix announced their deal December 5. Paramount, which had been pursing Warner for months, quickly launched a public tender offer, which it continued to revise amid a stream of rejections from the David Zaslav-run company.
With the superior offer, that changed. WBD decided to accept it and Netflix had four days to match. The streamer immediately walked away instead.
Each new bid by Paramount CEO David Ellison in recent months included escalating concessions. The WBD board still needs to vote to adopt the Paramount merger agreement, which will then no doubt be announced with fanfare and full financial detail. Meanwhile, here’s what’s know so far about the superior offer terms as per the two companies.
Netflix will exit the scene with a $2.8 billion termination fee, paid by Paramount.
Paramount will acquire all of WBD for $31 a share in cash. Its previous offer was for $30 a share in cash, which reflected a total equity value of $78 billion and an enterprise value of $108 billion, including the assumption of net debt and noncontrolling interest. The new valuations will be higher but it’s not clear exactly where they’ll fall until the deal is signed and sealed.
A daily “ticking fee” of $0.25 per quarter payable to WBD shareholders will accrue after September 30, 2026, until the consummation of the Paramount transaction. Paramount’s previous proposal (which was from Feb. 10) saw the ticking fee starting to accrue later, after December 31, 2026. It said then that the fee comes to about $650 million for each quarter the transaction has not closed beyond that date.
Paramount agreed to a regulatory termination fee of $7 billion payable to WBD in the event the transaction does not close due to regulatory issues. That’s up from $5.8 billion in its previous offer, which was already one of the largest breakup fees in corporate history.
Paramount will eliminate WBD’s potential $1.5 billion financing cost associated with its debt exchange offer.
Paramount agreed to a a “Company Material Adverse Effect” definition that excludes the performance of WBD’s Global Linear Networks business. That means it can’t use the material adverse effect clause to bail no matter how badly the linear television business deteriorates between signing and closing the deal.
The Ellison Trust is providing a $45.7 billion equity commitment, and Larry Ellison is guaranteeing such commitment, including an obligation to contribute additional equity funding to Paramount to the extent needed to support the solvency certificate required by Paramount’s lending banks. Bank of America, Citigroup and Apollo are providing a $57.5 billion debt commitment.
The previous offer included equity commitment of $43.6 billion by the Ellison family and RedBird Capital Partners, and $54 billion of debt commitments from BoFA, Citi and Apollo. Financing included an “irrevocable personal guarantee” from Oracle co-founder Larry Ellison of $43.3 billion covering the equity financing as well any damages claims against Paramount.
Debt Burden
Warner Bros. Discovery ended 2025 with $33.5 billion in debt, according to its latest quarterly financials released this morning. It looks like the Paramount deal would pile another $57.7 billion in debt on the combined company in what would be the biggest leveraged buyout in history. That’s over $90 billion in debt, about where the merged Discovery and WarnerMedia started out and it’s what happens when a smaller company acquires a larger one.
Paramount’s team has spoken of $6 billion in cost savings. That means layoffs. Rival Netflix always insisted that much steeper cuts would be necessary and had touted workforce preservation as one of the main benefits of its deal.
Paramount’s wildcard is the immense wealth of the Ellison family, led by patriarch Larry Ellison. The Oracle co-founder sits a no. 6 today on the Forbes Real-Time Billionaires List with an estimated net worth, according to the publication, of $194.9 billion.
Wall Streeters have just started weigh in on the switch.
“While the war for Warner Bros. Discovery ended sooner than expected, this result confirms our ongoing view that WBD was a necessity for PSKY while Netflix was being opportunistic. It signals that Netflix believes in its internal growth story enough to maintain M&A discipline,” said MoffettNathanson’s Rpbert Fishman in a note Thursday night. “We also believe the future Paramount Skydance Warner Bros. Discovery — they’ll need a better name — could finally transform two subscale media companies into a more serious industry player, provided management has the financial flexibility to execute on its vision.”