Paramount’s $111 billion Warner Bros. deal is paused

Warner Bros. Discovery (WBD) has become the center of one of Hollywood’s largest takeover battles, after years of debt, declining cable viewership, and intensifying streaming competition. The company began exploring a sale in October after receiving unsolicited interest from several major industry players.

How Paramount won the bidding war

Paramount and Comcast emerged as serious contenders, with Paramount initially seen as the frontrunner. WBD’s board later judged Netflix’s $82.7 billion offer for Warner’s film, television, and streaming assets to be the most attractive. Netflix amended the agreement in January, offering an all-cash payment of $27.75 per WBD share.

Paramount continued pursuing the entire company, arguing that its roughly $108 billion proposal was broader than Netflix’s studios-and-streaming deal. WBD repeatedly rejected Paramount’s offers, citing the bidder’s debt load and the involvement of Saudi, Qatari, and Abu Dhabi sovereign wealth funds. The board said Paramount’s proposal would leave the combined company carrying $87 billion in debt.

Paramount sued in January seeking more information about the Netflix agreement. In February, it offered WBD shareholders a $0.25-per-share “ticking fee” for each quarter the deal remained incomplete after December 31, 2026, and said it would pay Netflix’s $2.8 billion breakup fee if WBD abandoned that agreement.

Paramount then raised its offer to $31 per share. WBD’s board reopened discussions and treated it as a superior proposal. Netflix declined to match the bid and withdrew on February 26.

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“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval. However, we’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid.”

Paramount’s final offer, announced in late February, was valued at $111 billion and covers all of WBD’s assets: film and television studios, HBO, streaming services, games, and networks including CNN and HGTV. Paramount was recently acquired by David Ellison, with significant support from his father, Larry Ellison, Oracle’s chairman, the world’s sixth-richest person, and a major Trump donor.

The transaction would add WBD’s approximately $33 billion in debt to Paramount’s existing obligations. Financing includes a $54 billion debt commitment from Bank of America, Merrill Lynch, Citi, and Apollo Global Management, plus $45.7 billion in equity from Larry Ellison.

Regulatory fight and political concerns

The U.S. Department of Justice approved the deal in June, but opposition has continued. California Attorney General Rob Bonta said the state’s Department of Justice had an open investigation and would conduct a vigorous review. Before Netflix withdrew, 11 state attorneys general had urged the DOJ to scrutinize the merger over concerns about competition and subscription prices. Senators Elizabeth Warren, Bernie Sanders, and Richard Blumenthal also raised antitrust concerns.

A coalition of 12 state attorneys general filed suit on July 13, arguing that the merger would reduce competition and harm movie theaters, cable distributors, and viewers. The coalition is led by Bonta and includes Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington.

The deal also faces concerns over job cuts, lower wages, and editorial independence. Ellison has warned of significant reductions in the workforce. His ownership of CBS News has drawn scrutiny over coverage of the Donald Trump administration, while employees at Warner-owned CNN have expressed concern about the network’s future. Trump has publicly said he wants to bring CNN to heel under new ownership.

U.S. District Judge Araceli Martínez-Olguín issued a 14-day pause in response to the lawsuit. Paramount had hoped to close the acquisition as early as July, but the transaction is now paused until August 3, when a hearing will determine whether the freeze continues.