Paramount Launches $108 Billion Hostile Bid for Warner Bros. Discovery

Paramount Global escalates Hollywood’s merger frenzy by launching a $108 billion hostile takeover bid for Warner Bros. Discovery, aiming to thwart Netflix’s $82.7 billion acquisition agreement. The proposal, led by Skydance Media CEO David Ellison in coalition with private equity firms, offers $18 billion more in cash to Warner shareholders than Netflix’s mixed cash-and-stock deal. This aggressive move, detailed in a letter to Warner’s board on December 8, positions Paramount as a counterforce in the consolidation race, targeting assets like HBO, DC Studios, and Warner’s $50 billion content library.

Ellison’s bid values Warner Bros. Discovery at $45 per share, comprising $30 in cash and $15 in stock, surpassing Netflix’s $27.75 per share valuation announced December 5. The coalition includes RedBird Capital Partners and KKR, committing $15 billion in equity financing to cover Warner’s $41 billion debt load from the 2022 Discovery merger. Paramount’s strategy hinges on spinning off non-core assets like CNN and TNT Sports, projecting $4 billion in annual synergies through streamlined production pipelines shared with CBS and Nickelodeon.

Warner Bros. Discovery’s board, chaired by David Zaslav, entered exclusive talks with Netflix under a 30-day “go-shop” provision allowing superior offers until January 5, 2026. Netflix’s proposal includes a $5.8 billion reverse termination fee if regulatory hurdles block closure, contrasted by Paramount’s $3.2 billion breakup fee for rival pursuits. Industry analysts forecast antitrust scrutiny from the FTC, given the combined entity’s control over 40% of U.S. streaming subscribers via Max and Paramount+.

The bid arrives amid Warner’s fiscal pressures, with Q3 2025 revenues dipping 5% to $9.98 billion due to linear TV declines, offset by HBO’s ‘The Last of Us’ season two generating $500 million in licensing. Paramount’s $108 billion valuation exceeds its $28 billion market cap, requiring shareholder approval at a special meeting projected for February 2026. Ellison, son of Oracle founder Larry Ellison, leverages Skydance’s $1.2 billion Paramount stake acquired in July to anchor the offer.

Legal teams from Wachtell Lipton for Paramount and Cravath Swaine for Warner coordinate due diligence, reviewing 2,500 contracts across film, TV, and gaming divisions. The merger would consolidate franchises like ‘Dune’ and ‘Mission: Impossible’, potentially slashing $2.5 billion in overlapping VFX budgets at facilities in Vancouver and London. Netflix CEO Ted Sarandos responded via memo, affirming commitment to theatrical windows for Warner titles like ‘The Batman Part II’ set for October 2027.

Shareholder reactions split along institutional lines, with Vanguard and BlackRock—holding 18% of Warner—expressing preliminary support for Paramount’s higher payout. The deal includes a $1.5 billion commitment to independent cinema funds, addressing theater chain concerns from AMC and Regal operators. Closure timelines align for mid-2027, post-cable asset divestitures valued at $10 billion.

This escalation follows Comcast’s withdrawn $95 billion entry on December 6, narrowing the field to two bidders. Warner’s studios output 120 films annually, with Paramount adding 45, enabling cross-pollination for IP like ‘Transformers’ reboots. Ellison’s vision emphasizes AI-driven content personalization, integrating Warner’s 100,000-hour library with Paramount’s 50,000 hours for algorithmic recommendations.

Regulatory filings with the DOJ outline divestitures of regional sports networks, mitigating monopoly risks in 15 markets. The bid’s structure allocates 60% to cash payouts, appealing to retail investors amid Warner’s 25% stock drop since January. As negotiations intensify, the outcome could redefine streaming economics, with projected $8 billion in combined EBITDA for 2026.

Paramount’s aggressive play underscores desperation to scale against Disney’s $200 billion empire, where Hulu-Max bundles command 150 million subs. Warner employees, numbering 35,000, face integration plans retaining 90% under a no-layoff pledge through 2028. Ellison’s coalition secured $20 billion in debt commitments from JPMorgan, finalizing term sheets by December 15.