Paramount and WBD detail $110bn merger

Paramount and Warner Bros Discovery (WBD) confirmed their $110bn merger by promising to build a tech-savvy venture but added there would be “corporate-wide efficiencies” totaling $6bn on the cards.

The rapid reversal in fortunes for David Ellison’s Paramount late last week saw the company strike a deal for WBD that will hand it ownership of brands ranging from HBO and CNN to Warner Bros and Food Network.  

That came after Netflix stunned Hollywood by walking away from making an improved offer. WBD and Paramount said in a joint press release that both boards had “unanimously” approved Paramount’s offer of $31 per share and additional sweeteners, in a merger that would create ”a premier global media and entertainment company focused on expanding consumer choice and empowering creative talent worldwide”.

However, the companies also said the merger would “yield over $6bn in synergies” and “corporate-wide efficiencies”, widely understood to imply job losses.

Both companies have laid off staff in recent years. WBD made around 1,000 employees redundant after the WarnerMedia-Discovery merger in 2022, while Paramount made 1,000 of its workforce redundant last October and will lay off another 1,000 in cuts stemming from the Skydance Media merger.

The deal is expected to close in Q3 2026, subject to customary closing conditions and regulatory clearance. The US Department of Justice has opened its investigation and EU regulators will also review.

A WBD shareholder vote in early spring that had been scheduled for 20 March will now take place once merger proxy documentation is filed.

The pending deal creates a media behemoth housing IP, studio divisions and television networks including DC Studios, HBO, the Harry Potter, Lord Of The Rings, Transformers, Mission: Impossible and Top Gun franchises, as well as the Game Of Thrones universe.

A broad stable of cable and free-to-air networks in more than 200 territories will also fall under the enlarged group’s umbrella, including news outlets CNN and CBS, while streamers range from HBO Max and Paramount+ to FAST operator Pluto.

The combined streaming offering will, the companies said, be “pro-competition” that expands consumer choice and opportunities for creative talent and labour.

The subscriber count will reach more than 210m worldwide, and while that is still considerably behind market-leader Netflix’s 325m global membership, it is higher than the combined 195.7m of Disney+ and Hulu membership reported in December.

The number does not include Pluto TV, which is free ad-supported and reportedly has more than 80m monthly users.

Paramount chief exec David Ellison said: “From the very beginning, our pursuit of Warner Bros. Discovery has been guided by a clear purpose: to honour the legacy of two iconic companies while accelerating our vision of building a next-generation media and entertainment company.

“By bringing together these world-class studios, our complementary streaming platforms, and the extraordinary talent behind them, we will create even greater value for audiences, partners and shareholders - and we couldn’t be more excited for what’s ahead.”

WBD chief David Zaslav added: “I’m very pleased with the outcome we achieved for WBD shareholders and the entertainment industry.

“Our guiding principle throughout this process has been to secure a transaction that maximises the value of our iconic assets and our century-old studio while delivering as much certainty as possible for our investors. We look forward to working with Paramount to complete this historic transaction.”

The two companies will host a webcast on Monday when executives will field questions. Both the TV and film industries have many, ranging from how long Warner Bros will remain a stand-along company within the Paramount fold, to the future of HBO Max. The companies said on Friday that they would maintain both studio operations and release at least 30 films each year with a minimum 45-day theatrical window globally.

The transaction is funded by $47bn in equity, fully backed by the Ellison Family and RedBird Capital Partners, which may at closing include ”other strategic and financial partners”.

Paramount will issue new Class B shares at $16.02 per share and the transaction is backed by $54bn of debt commitments from Bank of America, Citigroup, and Apollo, which includes $15bn to backstop WBD’s existing bridge facility and $39bn of incremental new debt.

The $54bn excludes $3.5bn of bridge financing from these institutions to backstop an existing $3.5bn revolving credit facility.

By acquiring the entirety of WBD for $31 per share in cash in addition to the 25 cent “ticking fee” Paramount must pay WBD shareholders each quarter should the transaction not close by September 30 2026, the deal values WBD at $81bn in equity value and $110bn in enterprise value.