Warner Bros Discovery has agreed to a $110 billion acquisition by Paramount Skydance. The two entertainment companies signed the deal this morning. News of the agreement emerged from an audio recording of a company-wide town hall reviewed by Reuters.
The agreement caps a dramatic bidding war that reshapes the Hollywood landscape. It creates one of the world’s largest media conglomerates.
The transaction, which includes approximately $29 billion in debt, follows Netflix’s surprise decision yesterday to walk away from its pursuit of Warner Bros. The streamer had previously agreed to acquire Warner Bros.’ studio and streaming assets for $27.75 per share. Paramount’s final offer of $31 per share was deemed superior by Warner Bros.’ board.
Shares of Paramount surged 24% on the news. Netflix’s shares, meanwhile, rose 13% after the announcement. Investors appeared to welcome the company’s decision to exercise financial discipline rather than escalate the bidding war.
“Netflix had the legal right to match the PSKY offer. As you all know, they ultimately decided not to do that. That then resulted in a signed agreement with PSKY as of this morning. So that’s where everything stands,” Bruce Campbell, Warner Bros.’ chief revenue and strategy officer, told employees during the town hall.
The merger marks one of the biggest media restructurings in recent Hollywood history. By combining Paramount’s assets with Warner Bros.’ deep library of intellectual property — including such franchises as Fantastic Beasts and The Matrix — the new company would command one of the industry’s most formidable film studios.
The deal also has significant implications for the streaming wars. Paramount is expected to bolster its direct-to-consumer strategy, potentially combining Paramount+ with HBO Max to compete more aggressively with market leader Netflix. Such a move would create a streaming platform with an expansive movie and television catalog spanning decades of content.
Paramount, led by David Ellison, son of billionaire Larry Ellison, has pursued Warner Bros. since late last year. What began as a hostile campaign evolved into a prolonged negotiation, with Paramount repeatedly sweetening its offer to lure Warner’s board back to the table.
In its revised bid, Paramount raised the termination fee it would pay if regulators blocked the deal. The fee went up from $5.8 billion to $7 billion.
Paramount also paid the $2.8 billion termination fee Warner Bros. owed Netflix, according to a regulatory filing by the streaming company.
Despite the agreement, the merger faces regulatory scrutiny. Paramount is expected to secure European Union antitrust approval relatively easily. Any required liquidations are expected to be minor.
In the United States, however, the transaction has drawn attention from California Attorney General Rob Bonta. “Paramount/Warner Bros is not a done deal,” he said. He added that the California Department of Justice has an open investigation and intends to conduct a vigorous review.
Lawmakers from both political parties have voiced concerns that consolidation among major studios could reduce consumer choice and drive up prices. Cinema operators have also expressed alarm, warning that fewer major studios could lead to fewer theatrical releases and job losses.
Watchdog groups raised concerns about the combined company’s potential control of major news outlets, including CNN and CBS News. Critics warned that consolidation could threaten newsroom independence and reduce diversity of viewpoints.
The news that Netflix had abruptly ended its pursuit of Warner Bros. caught many in Hollywood off guard, including employees at Warner Bros., Paramount and Netflix.
Inside Warner Bros., the mood was described as somber. One executive called the news a “gut punch,” noting that employees had hoped Netflix might counter Paramount’s “superior proposal.” Instead, Netflix bowed out swiftly yesterday afternoon.
At Paramount Skydance’s offices on Melrose Avenue, however, executives reportedly celebrated. “There were tears of exhaustion and happiness,” said one insider, describing relief after months of intense negotiations.
At Netflix’s Hollywood headquarters, staff reacted with audible surprise when the company announced shortly before 3 p.m. PT that it was abandoning the bid. While some employees expressed disappointment about missing out on Warner Bros.’ production capabilities and content vault, others supported the decision to avoid overpaying.
For many Warner Bros. employees, the central question now is what happens next — to their jobs, to the company’s culture and to its historic Burbank lot.
A combined Paramount-Warner Bros. would control an expansive television production infrastructure, including Warner Bros. TV Group, CBS Studios and Paramount Television Studios. Insiders predict significant redundancies, particularly in television production and corporate functions.
Paramount executives have previously indicated plans to cut $6 billion by eliminating duplicative operations across back office, finance, legal and technology functions. Both companies have already undergone thousands of layoffs in recent years.
Concerns also extend to news divisions. CNN staffers are reportedly anxious about potential changes under new ownership. Mark Thompson, who currently runs CNN, urged employees not to jump to conclusions, noting in a memo that speculation remains premature.
On the sports front, the merger could reshape competitive dynamics. Warner Bros. Discovery recently lost NBA rights, but a combination with CBS Sports’ portfolio — including NFL rights and the Masters — could restore the company’s standing in live sports.
Beyond culture and jobs, debt looms large. Observers note that the new company could carry a massive debt burden. Warner Bros. Discovery had previously taken on more than $50 billion in debt following earlier mergers, reducing it to roughly $30 billion in recent years.
Critics argue that layering Paramount’s obligations on top of that could saddle the combined company with a debt load that constrains future investment in content and innovation.
WBD CEO David Zaslav acknowledged at an internal meeting that the deal could still be blocked. “The deal may not close. If it doesn’t close, we get $7 billion, and we get back to work,” he said, according to leaked audio.
For now, however, Paramount Skydance appears poised to reshape the entertainment industry. The Warner Bros. board may have delivered a financial win for shareholders by accepting the $31-per-share bid. But for thousands of employees across studios, networks and production units, the future remains uncertain as Hollywood braces for another era-defining merger.
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