Paramount has officially agreed a deal worth $111 billion for Warner Bros. Discovery.
The two companies unveiled the deal on Friday (27 February) after Netflix ruled itself out of the running a day earlier, citing a price that was “no longer financially attractive”, according to The Hollywood Reporter.
Paramount boss David Ellison said: “From the very beginning, our pursuit of Warner Bros. Discovery has been guided by a clear purpose: to honour the legacy of two iconic companies while accelerating our vision of building a next-generation media and entertainment company.
“By bringing together these world-class studios, our complementary streaming platforms, and the extraordinary talent behind them, we will create even greater value for audiences, partners and shareholders – and we couldn’t be more excited for what’s ahead.”
Warner Bros. Discovery CEO David Zaslav added: “I’m very pleased with the outcome we achieved for WBD shareholders and the entertainment industry.
“Our guiding principle throughout this process has been to secure a transaction that maximises the value of our iconic assets and our century-old studio while delivering as much certainty as possible for our investors.
“We look forward to working with Paramount to complete this historic transaction.”
As per The Hollywood Reporter, “The deal will see Paramount pay $31 per share for WBD, but it also had other elements, including a ticking fee payable to shareholders equal to $0.25 per quarter beginning after 30 September 2026, as well as a $7 billion regulatory termination in the event the transaction does not close due to regulatory matters.
“The ticking fee means that the price of WBD will rise the longer the regulatory process takes.”
Paramount has also paid the $2.8 billion termination fee that Warner Bros. was required to pay to Netflix to abandon its previously signed deal, while the new deal would require WBD to pay Paramount $3 billion if it backs out.
This deal is expected to close in Q3 of this year, with Paramount making several commitments in an attempt to ease fears around the move – particularly from those worried it may impact Warner Bros.’ cinema distribution.
For instance, the company has said it will maintain both Paramount and Warner Bros. as independent studios, with 15 films expected from each every year, as well as full 45-day windows before going to premium video on-demand, with longer windows for bigger titles.
Paramount also commits to continue selling its programming to third parties, and to be a buyer of content from other studios.
Yet there remain fears of “substantial layoffs” due to the deal, per THR, as well as other concerns around asset sales.
“Warner Bros. is a world-class organisation, and we want to thank David Zaslav, Gunnar Wiedenfels, Bruce Campbell, Brad Singer and the WBD Board for running a fair and rigorous process,” WBD co-CEOs Ted Sarandos and Greg Peters said in a statement.
“We believe we would have been strong stewards of Warner Bros.’ iconic brands, and that our deal would have strengthened the entertainment industry and preserved and created more production jobs in the US.
“But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
