In the end, it came down to who wanted it more—or perhaps, who was willing to pay more than prudence might suggest.
Paramount Skydance closed its $110 billion acquisition of Warner Bros. Discovery on February 27, outbidding Netflix in what ranks among the largest media mergers ever attempted. The price tag: $31 per share, all cash. Netflix, which had been circling WBD for months, walked away rather than match Paramount's final sweetened offer, a retreat the streaming giant's co-CEOs framed as financial restraint winning out over empire-building impulse.
Whether that's spin or strategy, the market seemed to buy it. Netflix's stock ticked up following the announcement, and more than one analyst suggested the company had "won by losing"—dodging both the price escalation and the regulatory gauntlet now awaiting Paramount.
The deal values WBD's equity at roughly $81 billion. Factor in debt, and the enterprise value swells to $110 billion, a figure that reflects not just assets but ambition. Paramount raised its bid from an initial $30 per share after WBD's board designated the revised proposal a "Company Superior Proposal" on February 26. That triggered a four-business-day match period for Netflix, which declined to play another round.
A Financing Puzzle With No Escape Hatch
Paramount didn't just promise $110 billion. It delivered $101 billion in committed financing before signing, structured deliberately without a financing condition—Wall Street's way of saying there's no wiggle room if the money gets cold feet.
The Ellison family and RedBird Capital Partners backstopped the equity piece entirely: $47 billion in newly issued Class B Paramount stock priced at $16.02 per share. That's a premium to where Paramount traded before the deal surfaced, though not by much. The issuance will flood the market with approximately 2.9 billion new shares, pushing total shares outstanding to around 4 billion. Existing shareholders get access to a $3.25 billion rights offering at the same price, though that won't open until closer to the finish line.
On the debt side, Bank of America, Citigroup, and Apollo committed $54 billion across a tangle of facilities. Fifteen billion dollars goes toward backstopping WBD's existing bridge loan. Another $39 billion represents fresh incremental debt. Add a separate $3.5 billion revolving credit backstop for Paramount's existing revolver, and you have the recipe for a balance sheet that will take years to digest.
Paramount projects pro forma net debt-to-EBITDA of 4.3 times—on a fully synergized basis, naturally. The company insists it can reach investment-grade credit within three years. Bond investors, one imagines, will watch that timeline closely.
The Cost of Changing Your Mind
This deal comes loaded with fees designed to prevent anyone from getting cute about backing out.
Paramount agreed to cover WBD's $2.8 billion termination fee owed to Netflix under their previous agreement. If regulators kill the deal, Paramount owes WBD a $7 billion reverse termination fee—one of the heftier break-up penalties in recent M&A history. There's also a ticking fee: $0.25 per share per quarter if the transaction drags past September 30, 2026.
The clock is already running. Paramount expects to close in the third quarter of 2026, pending regulatory approvals and a WBD shareholder vote. The company is pitching over $6 billion in synergies from the combination, though as any M&A veteran knows, projected synergies and realized synergies rarely meet on first introduction.
How Netflix Got Here—and Why It Left
Netflix's exit surprised some observers, though perhaps it shouldn't have. The streaming giant had announced its own merger agreement with WBD late last year, at a reported $27.75 per share cash component. That triggered Paramount's initial hostile tender offer at $30 per share in December 2025, kicking off a bidding war that saw Paramount enhance its proposal multiple times—adding guarantees, backstops, and eventually another dollar per share.
Netflix could have matched again. It chose not to. The company's co-CEOs pointed to capital discipline, and there's likely truth in that. Netflix spent the better part of a decade convincing investors it could grow without burning infinite cash. Dropping $110 billion on a legacy media conglomerate would have scrambled that narrative thoroughly.
Then there's the regulatory question. Netflix may have calculated that even if it won the auction, it would lose the approval process—a messy, expensive, uncertain path with no guarantee of success.
The Regulatory Gauntlet
California Attorney General Rob Bonta wasted no time signaling his office would conduct a "vigorous review" of the Paramount-WBD tie-up. His concerns: consolidation, jobs, competitive effects. Standard objections, perhaps, but not trivial ones when two major studios, two streaming platforms (Paramount+ and Max), a thicket of cable networks (CNN, TBS, TNT, Discovery channels), and vast film libraries all land under one roof.
Federal antitrust authorities are expected to take a hard look. European regulators, too. The combined entity will control intellectual property spanning decades of film and television production, plus gaming assets neither company has yet figured out how to monetize properly. Paramount has pledged to maintain both studios and support theatrical windowing, though such promises have a way of evolving once integration begins.
Centerview Partners, RedBird Advisors, BofA Securities, Citi, M. Klein & Co., and LionTree advised Paramount, with Cravath and Latham providing legal counsel. Allen & Company, J.P. Morgan, and Evercore advised WBD, represented by Wachtell and Debevoise. That's a lot of billable hours, and the meter's still running.
Whether this deal represents prescient consolidation or expensive hubris won't be clear for years. What is clear: Paramount made a bet, and now it has to win it twice—once in the market, once with the regulators. Netflix, for its part, gets to watch from the sidelines and claim the moral victory of restraint.
In media mergers, that's sometimes the smartest play.
