AceShowbiz - Warner Bros. Discovery has chosen to accept a lucrative offer from Paramount, leaving Netflix behind after a previously announced merger deal.

Initially, Warner Bros. Discovery and Netflix revealed their agreement on December 5. However, Paramount, which had been pursuing Warner Bros. Discovery for several months, launched a public tender offer that was repeatedly rejected by the David Zaslav-led company. This dynamic shifted when Paramount presented what it termed a "superior offer," prompting Warner Bros. Discovery to reconsider and accept Paramount’s bid, giving Netflix four days to match it. The streaming giant declined and withdrew from the deal.

Paramount CEO David Ellison has steadily increased concessions with each new offer over recent months. The Warner Bros. Discovery board still needs to vote on approving the Paramount merger agreement, which is expected to be announced publicly with full financial details once finalized. Meanwhile, key terms of the superior offer have been disclosed by the involved companies.

Netflix will receive a substantial $2.8 billion termination fee paid by Paramount for walking away from the transaction.

Paramount will acquire all outstanding Warner Bros. Discovery shares at $31 per share in cash, an increase from the prior $30 per share offer. The earlier proposal valued the company’s equity at approximately $78 billion and the enterprise value at $108 billion, which included net debt and noncontrolling interests. Although the new valuations are expected to be higher, exact figures will be confirmed only after the deal is officially completed.

Additionally, a daily “ticking fee” of $0.25 per quarter will be payable to Warner Bros. Discovery shareholders starting September 30, 2026, and will continue until the Paramount transaction closes. This is an acceleration compared to the previous offer, which set the fee to accrue after December 31, 2026. The earlier fee was estimated at roughly $650 million per quarter for any delay beyond that date.

Paramount has agreed to a $7 billion regulatory termination fee payable to Warner Bros. Discovery if the deal fails due to regulatory hurdles. This is a significant increase from the prior $5.8 billion breakup fee.

Another key concession by Paramount is its commitment to eliminate $1.5 billion in potential financing costs linked to Warner Bros. Discovery’s outstanding debt exchange offer.

Paramount’s agreement also includes a narrowed definition of “Company Material Adverse Effect” that excludes the performance of Warner Bros. Discovery’s Global Linear Networks business. This means Paramount cannot invoke this clause to back out of the deal if the traditional linear television segment deteriorates between signing and closing.

Backing the transaction financially, the Ellison Trust is providing a $45.7 billion equity commitment, personally guaranteed by Larry Ellison. He has also pledged to supply additional equity funding if required to satisfy solvency certificates mandated by Paramount’s lending banks. The debt commitment amounts to $57.5 billion, supplied by Bank of America, Citigroup, and Apollo.

The previous offer involved $43.6 billion in equity commitments from the Ellison family and RedBird Capital Partners, alongside $54 billion in debt commitments. It also included an irrevocable personal guarantee from Larry Ellison covering the equity financing and any damages claims against Paramount.

Looking at Warner Bros. Discovery’s current financial condition, the company ended 2025 with $33.5 billion in debt, as disclosed in its latest quarterly financial report. The Paramount deal would add roughly $57.7 billion in new debt to the combined entity. The total debt load would surpass $90 billion.

Paramount’s management has touted $6 billion in expected cost savings from the merger, which would likely result in workforce reductions. This contrasts with Netflix’s position, which argued for deeper cuts but emphasized maintaining jobs as a key advantage of its proposed deal.

The financial strength of the Ellison family, led by Larry Ellison, represents a factor in this transaction. Currently ranked number six on the Forbes Real-Time Billionaires List, Larry Ellison’s net worth is estimated at $194.9 billion.

Market analysts have begun weighing in on the latest development. Robert Fishman from MoffettNathanson noted that the swift conclusion of the bidding war confirmed Paramount’s strategic necessity for acquiring Warner Bros. Discovery, while highlighting Netflix’s confidence in its own growth prospects by refusing to overextend in acquisitions. Fishman also suggested that the combined Paramount, Skydance, and Warner Bros. Discovery entity could become a significant media player if it manages its financial resources effectively.

In summary, the deal sees Paramount outbidding Netflix and securing an acquisition backed by the financial resources of the Ellison family. Netflix exits with a $2.8 billion payout, while Warner Bros. Discovery prepares for a new chapter under Paramount’s ownership, pending final approvals and regulatory clearance.