How Netflix Compelled Paramount to Pay a Higher Price for Warner Bros.

Paramount Triumphs in Warner Bros. Acquisition After Fierce Bidding War

Photographer: Patrick T. Fallon/AFP/Getty Images

David Ellison has finally secured his long-sought acquisition, but the journey came with a hefty price tag.

Ellison’s Skydance, backed by Paramount, faced intense competition from Netflix in the race to acquire Warner Bros. Discovery Inc. The rivalry drove the final purchase price up by at least $31 billion more than Ellison’s team had initially anticipated for the iconic Hollywood studio.

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The final deal, one of the largest in the media industry over the past ten years, was valued at $31 per share in cash—totaling $111 billion when including debt. This amount was high enough that Netflix decided not to increase its $27.75 per share offer and exited the contest.

To secure the agreement, Ellison also had to sweeten the deal further: he obtained additional support from his billionaire father, agreed to take on $57.5 billion in debt, and committed to covering a $2.8 billion breakup fee owed to Netflix.

“We engaged with four bidders, which led to eight price increases and have thus far achieved a 63% increase in value versus the first offer received in September, delivering significant value for WBD shareholders throughout the process,” Warner Bros. CEO David Zaslav shared with investors during a recent earnings call.

Some industry experts believed Paramount would need to raise its bid to $32 per share to outpace Netflix, especially after Warner Bros. struck a deal with Netflix and claimed their offer was superior.

“If you had asked me at the beginning of this process if the company would sell for $30 a share, I would have said, ‘Absolutely not,’” commented Douglas Arthur, an analyst at Huber Research Partners.

Deal Valuation and Timeline

According to Bloomberg Intelligence’s Geetha Ranganathan, Paramount’s offer values Warner Bros. at 12.5 times its projected earnings before interest, taxes, depreciation, and amortization. For comparison, Disney’s 2019 acquisition of 21st Century Fox was valued at roughly 14.5 times forward earnings.

Key Milestones in the Acquisition

• September 14, 2025: Initial offer of $19 per share, combining cash and stock.
• September 30: Larry Ellison joins the negotiations; Paramount increases its bid to $22 per share (67% cash) and introduces a $2 billion reverse termination fee if regulatory approval isn’t granted.
• October 13: Paramount raises its offer to $23.50 per share, with 80% in cash.
• November 20: The bid climbs to $25.50 per share, with an option for 85% cash and 15% stock.
• December 4: Paramount proposes $30 per share, all in cash.
• December 5: Netflix counters with a $27.75 per share offer in cash and stock for Warner Bros.’ studio and streaming assets.
• December 8: Paramount launches a tender offer at $30 per share.
• December 22: Larry Ellison personally guarantees $40 billion.
• January 20, 2026: Netflix revises its offer to $27.75 per share, all in cash.
• February 10: Paramount agrees to cover the $2.8 billion breakup fee Warner Bros. would owe Netflix if the deal falls through.
• February 24: Warner Bros. announces Paramount’s improved $31 per share offer.
• February 26: Warner Bros. determines Paramount’s proposal is superior; Netflix declines to increase its bid.

Final Terms and Financial Commitments

In the final agreement, Paramount committed to paying a “ticking fee” of $0.25 per share for each quarter the deal remains unclosed beyond September 30. The company also agreed to eliminate Warner Bros.’ potential $1.5 billion financing cost related to its debt exchange, while the Ellison Trust pledged a $45.7 billion equity commitment, personally backed by Oracle Chairman Larry Ellison. Bank of America, Citigroup, and Apollo Global Management are providing $57.5 billion in debt financing.

If antitrust regulators block the merger, Paramount could be liable for an additional $7 billion.

Reporting assistance by Veena Ali-Khan.

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