Netflix Amends WBD Offer Amid Bidding War with Paramount

In a definitive move to cement one of the largest media mergers in history, Netflix has amended its acquisition offer for Warner Bros. Discovery (WBD) to an all-cash transaction. The revised bid maintains the previous valuation of $82.7 billion but replaces the original cash-and-stock structure with a straightforward cash payout.

This pivot is widely viewed as a strategic maneuver to fend off a hostile takeover attempt from Paramount-Skydance and to provide immediate value certainty to WBD shareholders.

Key Terms of the Amended Deal

The transition to an all-cash offer simplifies the acquisition process and addresses concerns regarding market volatility. WBD shareholders will still receive equity in “Discovery Global,” a separate entity being spun off to house assets Netflix is not acquiring (including CNN, TNT Sports, and the Discovery Channel). The deal will be funded through a mix of Netflix’s cash on hand, existing credit facilities, and newly committed debt financing.

Why the Shift to All-Cash?

The amendment comes after rival bidder Paramount Global, backed by Skydance, launched a hostile $108.4 billion all-cash bid for the entirety of WBD. While Paramount’s offer is higher in total enterprise value, the WBD board has repeatedly flagged it as a “risky leveraged buyout” due to the massive debt Paramount would need to incur.

By moving to all-cash, Netflix has eliminated “market-based variability.” Previously, since the original deal was announced in December 2025, Netflix’s stock had dipped roughly 15%, which Paramount used as leverage to argue that Netflix’s stock-heavy offer was losing value.

The WBD Board of Directors has unanimously recommended the Netflix offer, citing its “superior execution certainty” compared to Paramount’s hostile bid.

“Today’s revised merger agreement brings us even closer to combining two of the greatest storytelling companies in the world and with it even more people enjoying the entertainment they love to watch the most,” said David Zaslav, President and CEO of Warner Bros. Discovery.

Zaslav added, “By coming together with Netflix, we will combine the stories Warner Bros. has told that have captured the world’s attention for more than a century and ensure audiences continue to enjoy them for generations to come.”

Paramount Sued WBD

Meanwhile, Netflix’s amended offer comes days after Paramount sued WBD in Delaware Chancellery Court. The lawsuit aims to force WBD to provide transparency regarding:

• Valuation Discrepancies: How WBD valued the “Global Networks” stub equity and the overall Netflix transaction.
• Risk Adjustments: The basis for WBD’s “risk adjustment” of Paramount’s $30-per-share all-cash offer.
• Debt Mechanics: Details on how purchase price reductions for debt function within the Netflix deal.

“WBD has failed to include any disclosure about how it valued the Global Networks stub equity, how it valued the overall Netflix transaction, how the purchase price reduction for debt works in the Netflix transaction, or even what the basis is for its ‘risk adjustment’ of our $30 per share all-cash offer,” said David Ellison in a letter.

Paramount Launches a Proxy Battle for WBD

Beyond the courtroom, Paramount Skydance launched a proxy battle to seize control of the WBD board. It intends to nominate a slate of its own directors to WBD’s board at the next annual meeting. These directors would be tasked with reconsidering Paramount’s offer under their fiduciary duties. Furthermore, Paramount is proposing an amendment that would require shareholder approval for any separation of WBD’s “Global Networks” (a key component of the Netflix deal).

WBD Has Twice Rejected Paramount’s Offer

Meanwhile, WBD’s board has twice rejected Paramount’s offer, saying it is inferior to what Netflix is offering. The board’s primary concern is the debt. Paramount’s bid would require over $50 billion in new borrowing, creating a total debt load of $87 billion for the combined entity. WBD Chair Samuel Di Piazza Jr. warned that this “extraordinary amount of debt” creates significant risk that the deal could fail to close, leaving WBD in a weakened state.

In its release, it also pointed to the massive difference in the sizes of Paramount and Netflix. “PSKY is a company with a $14 billion market capitalization attempting an acquisition requiring $94.65 billion of debt and equity financing, nearly seven times its total market capitalization,” said WBD in its release.

Speaking with CNBC, Piazza said, “We have a signed merger agreement with Netflix, it’s a compelling value, a clear path to closing, and protections for our shareholders if something stops the close, whatever that might be.”

WBD Would Need to Pay Termination Costs to Netflix

The Board evaluated the significant financial penalties associated with accepting Paramount’s offer. Switching from the existing Netflix agreement would trigger a $2.8 billion termination fee and a $1.5 billion debt exchange penalty, alongside $350 million in incremental interest. These costs total $4.7 billion ($1.79 per share). Ultimately, these obligations would reduce Paramount’s effective regulatory termination fee from $5.8 billion to just $1.1 billion. By contrast, the Netflix transaction carries none of these financial burdens.

Why Paramount Wants to Buy Warner Bros. Discovery?

A desire for rapid survival drives Paramount’s interest in acquiring Warner Bros. Discovery through scale. In a landscape dominated by tech giants like Netflix, Amazon, and Disney, Paramount CEO David Ellison views this merger as the only way to transform Paramount from a “vulnerable legacy player” into a “global media titan.”

Streaming is currently a game of scale where only the largest survive. By combining Paramount+ with Max (HBO), the new entity would control the fourth-largest streaming library in the world, with over 207 million subscribers. This would give the combined company the leverage needed to negotiate better pricing with advertisers and reduce the “churn” (subscribers canceling) that plagues smaller services.

Moreover, the deal will create the most powerful sports broadcasting platform in history, making the combined company a vital partner for every cable and satellite provider worldwide.

Why Netflix Is Interested in WBD?

By owning this content, Netflix eliminates billions in future licensing costs and the risk of titles being pulled by rivals. The sheer volume of new content reduces “hit-rate risk” and strengthens the value proposition for its subscribers globally. As Netflix Co-CEO Ted Sarandos noted, the mission to “entertain the world” is better achieved by combining their “culture-defining titles” with Warner Bros.’ century-long legacy.

The merger combines the world’s largest streaming service by subscribers with HBO Max, a premium, critically acclaimed competitor. Analysts predict the combined entity will command over 21% of US streaming viewership, creating a significant market gap between Netflix and its remaining competitors, like Disney+ and Amazon.

Netflix expects to realize at least $2-3 billion in annual cost savings by the third year. This will come from eliminating duplicated services (like merging HBO Max into the Netflix platform), integrating production infrastructure, and optimizing back-office functions. This massive saving provides a financial cushion to reinvest in original content or pass savings on to consumers through bundled offerings