Paramount Wins Warner Bros. Discovery With a $110.9 Billion Cash Offer

The board of Warner Bros. Discovery determined on Thursday that a revised all-cash offer from Paramount Skydance valuing the company at about $110.9 billion, or $31 a share, constituted a superior proposal to its existing merger agreement with Netflix. Netflix declined to match and withdrew.

The decision ends a contest that began in December, when Warner agreed to a transaction with Netflix valued at roughly $82.7 billion — $27.75 a share — under which the studio and streaming assets would have gone to Netflix while the linear television networks were spun off.

Why cash won

The two proposals were structurally different, and that difference mattered more than the headline gap.

The Netflix agreement required separating the company: streaming and studio assets to the buyer, cable networks to shareholders as a standalone business with declining revenue and considerable debt capacity. Shareholders would have owned a piece of that spun-off entity.

Paramount's tender offer was all cash for the whole company. No separation risk, no exposure to the future of linear television, no dependence on how the market would value a spinoff.

At a $3.25-a-share premium, that certainty was decisive.

What Paramount is buying

The combination brings together two of the six major American film studios, an enormous television library, cable networks on both sides, and two streaming services that have each been sub-scale relative to the market leader.

The strategic argument is consolidation in an industry where content spending is fixed and enormous, and where subscriber growth in the domestic market has largely stopped. Two libraries on one platform costs less to run than two platforms.

What comes next

A transaction of this size will be reviewed at length. The immediate question is antitrust — combining two of the largest studios concentrates the market for theatrical production and for licensing content to distributors.

The second question is debt. An all-cash acquisition at this scale is financed, and the combined company will carry an obligation that assumes a level of cash generation the streaming business has yet to demonstrate consistently.