The corporate battle for control of Warner Bros Discovery enters a crucial phase after the latest move Paramount SkydanceThe group led by David Ellison has decided to strengthen its hostile takeover bid, a maneuver with which it intends to derail the agreement already signed between Warner and Netflix and present themselves as the safest alternative for shareholders.
Paramount's proposal maintains the price of $30 per share, all in cashThis values Warner Bros. Discovery (WBD) at around $108.000 billion. However, it includes a series of additional guarantees—from the assumption of penalties to compensation for regulatory delays—that seek to dispel doubts about the cost of breaking with Netflix and the high debt of the resulting group.
A hostile takeover bid that is being protected against the Netflix deal
The board of directors of Warner Bros Discovery It surprised the market when, at the end of the year, it agreed to sell its film and television studios and the business of streaming HBO Max Netflix by 27,75 dollars per shareThis values the deal at approximately $82.700 billion, including debt. This transaction, unanimously supported by Warner's top management, has been presented as the option with the lowest execution risk.
In parallel, Paramount Skydance launched a hostile takeover bid Warner offered $30 per share for the entirety of WBD, entirely in cash, exceeding Netflix's offer in face value. However, Warner's board repeatedly rejected the proposal, deeming it "inferior" due to financial risks, regulatory complexity, and the costs of breaking the agreement with the Los Gatos-based platform.
To counter this argument, Paramount has gone a step further and decided to take charge of the $2.800 billion buyout clause that Warner would have to pay Netflix if it ultimately chose another offer. Thus, the penalty for abandoning the agreement with Netflix It would not fall on WBD or its shareholdersbut would be covered directly by Ellison's company.
Furthermore, Paramount will assume up to $1.500 billion in commissions linked to the debt refinancing from Warner Bros. Discovery, should such a financial restructuring be necessary to facilitate the transaction. The goal is to present a proposal that not only surpasses Netflix's in price, but also neutralize the additional costs that Warner had cited as the main justification for opting for the merger with the platform streaming.
The firm insists that these payments—both the penalty to Netflix and the refinancing fees—will be treated as independent disbursementsso that they do not reduce either the offer amount of $30 per share or the reverse termination fee of $5.800 billion provided for in their takeover bid structure.
Late fee to compensate for regulatory delays
Aware that a move of this magnitude will be subject to intense scrutiny by competition authorities, Paramount has introduced a late fee (known in financial jargon as ticking fee). This commission translates into the payment of An additional $0,25 per share to WBD shareholders for each quarter in which the transaction remains pending closing after a certain date.
In practice, this fee would begin to accrue from the December 31th 2026 or, according to other communications, from January 1, 2027, and would entail a quarterly disbursement of around $650 million (approximately €547 million) for Paramount if the process is prolonged. With this, the company intends to compensate investors for any delays that may arise during regulatory scrutiny.
Paramount emphasizes that this measure aims to demonstrate its confidence in the speed and certainty of the regulatory processThe company claims to have already responded to a «second request for information from the Department of JusticeRegarding its takeover bid for WBD, this triggers a window of approximately ten days for the authorities to issue a decision. If the process proceeds without significant objections, the firm could use this milestone as evidence that its offer is viable. real advantage in the regulatory sphere regarding the agreement with Netflix.
Internationally, Paramount has indicated that it already has the approval from the foreign investment authorities in Germany and that it continues to collaborate "constructively" with competition authorities and supervisors in various jurisdictions, including Europe. The underlying message is clear: the company wants to present itself as a more predictable and controlled option For regulators, this is especially concerning given the potential market power Netflix would accumulate if it acquires Warner's assets.
To further reinforce that idea, David Ellison has publicly argued that Paramount's acquisition of WBD would be "pro-consumer" and "pro-competition"arguing that the audiovisual market would benefit from the existence of a strong group capable of standing up to both the major technology companies and the dominant platforms of streaming.
Financing secured and doubts about the debt
The other major front in the negotiations is the debt volume which the integrated company would bring with it. Warner had described Paramount's initial proposal as "the largest leveraged buyout in history," noting that the resulting group could accumulate approximately $87.000 billion of gross debt and a level of indebtedness equivalent to about seven times the EBITDA forecast for 2026.
In response to these criticisms, Paramount has redoubled its efforts to demonstrate that The operation is fully funded and backed by investors and banks with sufficient resources. According to its latest communications, the improved takeover bid has capital commitments of $43.600 billion (approximately 36.700 billion euros) by the Ellison family and RedBird Capital Partners.
Added to this are 54.000 million (around 45.500 billion euros) in debt commitments insured by large international financial institutions such as Bank of America, Citigroup and Apollo Global ManagementTaken together, this structure would allow for the financing of both the cash payment to WBD shareholders and the penalties and fees associated with the possible termination of the agreement with Netflix.
The tech mogul Larry EllisonOracle co-founder and main financier of the operation through Paramount Skydance, had already offered a personal guarantee of more than 40.000 billion dollars in an earlier phase of the process. That support is maintained within the current package, with the intention of reinforcing the perception of the offer's solvency.
Even so, Warner's board insists that the deal with Netflix presents less financial and regulatory riskThe formula chosen by the platform streaming implies the spin-off of Discovery Globalwhich, according to its proponents, would reduce the complexity of the agreement.
Discovery Global, the weak point of the Netflix option
Paramount, for its part, has taken the opportunity to point out the weaknesses of this alternative model. In its analysis, the split of Discovery Global that Netflix proposes would have a very limited asset valuesince WBD plans to place a burden on that new company debt of around $17.000 billion (approximately 14.300 billion euros). For a cable channel business in clear phase of declineIt is an "unsustainable" volume.
Paramount's calculations suggest that Discovery Global's EBITDA could decrease by around 22% between 2026 and 2027with double-digit declines in subsequent years. In that context, the company considers it likely that some of that debt will have to be reassigned to the Studios and Streaming division from WBD, precisely the one that Netflix would acquire.
That debt transfer would trigger, according to the merger documents, a “adjustment mechanism” which would cut the final cash to be received by the shareholders Warner's involvement in the Netflix deal. In fact, WBD itself has acknowledged in its filings with the U.S. Securities and Exchange Commission that the cash consideration for the merger may vary, depending on Discovery Global's financial situation at the time of the separation.
Faced with that variable range, Paramount insists that its proposal $30 per share, entirely in cash, for 100% of WBDIt provides "certainty of value" and avoids uncertainties arising from debt adjustments or internal asset movements. For Warner's current shareholders, this difference in approach is significant, as it directly affects the amount of money they will end up receiving.
This criticism is accompanied by a broader discourse from David Ellison, who has gone so far as to warn that Netflix's acquisition of Warner could lead to a overly dominant position in the content market and streamingThis is something that particularly worries sector organizations and some regulators, including in Europe.
Political context, audiovisual sector and messages to Europe
The dispute also has a political and sectoral dimension. Some Republican senators in the United States, such as Ted CruzThey have expressed their rejection of the agreement between Warner and Netflix, which they accuse of responding to a "political agenda" and consolidating the platform's hegemonic position. Meanwhile, U.S. Department of Justice has opened a specific investigation into the transaction, given the risk that the combined assets of Netflix and WBD could concentrate a Excessive power in the audiovisual business.
Aware that the regulatory landscape will be a determining factor both in the United States and in EuropeParamount has decided to address not only investors and advisors, but also creators, exhibitors and community authoritiesIn an open letter, David Ellison has promised a series of production and theatrical exhibition commitments if he finally manages to acquire Warner Bros. Discovery.
Among those commitments, the executive has pledged that Paramount Studios and Warner Bros Studios produce at least 15 high-quality feature films each per yearso that the combined group launches a minimum of 30 films per yearEllison emphasizes that a "dynamic ecosystem" will be maintained for third parties, with licensing to other operators and purchases of independent contentThis aims to reassure European producers and chains that depend on distribution from major studios.
Another key point is the commitment to movie theatersParamount promises that all films from the resulting studios will have a full theatrical release, with a minimum global window of 45 days before its arrival on video-on-demand platforms or services streaming by subscription, also respecting the national windows specific to each European market. This promise connects directly with the regulatory requirements of the European Union and with the traditional demands of the exhibition industry in Spain, France, or Italy.
Ellison has also pledged to to keep the HBO platform "independent" within the resulting group, this aims to allay fears of an overly aggressive integration that could harm the diversity of platforms and business models. According to their statement, the deal with Warner would aim to "strengthen competition" against the major tech companies and the most dominant platforms, a nod to regulators who fear the consolidation of "champions" with virtually unshakeable market power.
Market reactions and next steps
Paramount's expanded offering has been met with immediate enthusiasm in the markets. Following the announcement, Warner Bros. Discovery shares rose by around 2%., while Paramount's titles progressed around a 1,5%It is noteworthy that the actions of Netflix They also experienced upticks in the environment of 2,5% to 3%This reflects that some investors interpret that, even if the purchase does not go through, the platform is strengthened by the perception that its assets are highly sought after.
Despite mounting pressure, the Warner Bros. Discovery board continues to officially support the agreement with Netflixwhich will be put to a shareholder vote, presumably before April. Some market sources suggest that the extraordinary general meeting could be held around March, leaving Paramount with a margin of maneuver of a few weeks to further improve their takeover bid or convince large institutional funds.
For now, support for Ellison's bid is still moderate: some reports indicate that barely a 7% of the capital He would have expressed his explicit support. Paramount's strategy involves pressuring the WBD council to withdraw its recommendation in favor of the Netflix deal and declare itself "neutral" before the vote, so that shareholders can evaluate both options without an official position tipping the scales.
Meanwhile, both operations—Paramount's hostile takeover bid and the agreed merger with Netflix—remain under scrutiny. competition regulators in the United States and other jurisdictions. The progress of these cases will be key for both major US shareholders and European funds with significant holdings in WBD, who will be closely watching for any indication that one of the options is more likely to be approved.
For European markets, and in particular for Spain, where HBO and Warner channels have gained ground in recent years, the outcome of this struggle will define the map of alliances and content of the next decade. The combination of Paramount and Warner would create a "super studio" with a strengthened presence in film, television, and streamingwhile the Netflix option would further consolidate the weight of digital platforms in the audiovisual ecosystem.
With the introduction of late fees, the assumption of multimillion-dollar penalties, and the closure of a complex financing arrangement With the backing of banks and key partners, Paramount Skydance has transformed its offer into a full-blown challenge to Warner's deal with Netflix. The final decision will rest with WBD shareholders and regulators on both sides of the Atlantic, who will decide whether the future of Hollywood studios and brands like HBO is shaped by a media giant. streaming or under the umbrella of a traditional group strengthened to compete on the new global playing field.
