Netflix has officially agreed to pay all cash for Warner Bros. Discovery‘s studios and HBO Max business — a move aimed at thwarting Paramount Skydance’s rival takeover campaign.
Netflix and WBD announced Tuesday that they amended their definitive agreement for Netflix’s proposed acquisition of Warner Bros. assets to an all-cash transaction of $27.75 per share. The deal continues to carry an $82.7 billion enterprise value. The companies said the revised agreement “simplifies the transaction structure, provides greater certainty of value for WBD stockholders, and accelerates the path to a WBD stockholder vote.”
Netflix’s original agreement with WBD, announced Dec. 5, was about 84% cash, while Paramount Skydance has been offering 100% in cash. One relative weakness with the Netflix pact as originally constructed: If Netflix’s stock declined below a certain threshold, the payout to WBD shareholders would be lower.
Netflix’s all-cash deal “provides enhanced certainty around the value WBD stockholders will receive at closing, eliminating market-based variability,” Netflix and WBD said. In addition, the revised deal terms will facilitate a “faster path” to a WBD stockholder vote on the Netflix deal: Shareholders will be able to to vote on the proposed transaction by April 2026. On Tuesday WBD filed a preliminary proxy statement with the SEC “to support this accelerated timeline.”
Another change: Netflix agreed to reduce the specified amount of net debt to be borne by Discovery Global — the cable TV networks entity to be spun off prior to Netflix’s takeover of WB studios and HBO Max — by $260 million. That was “in light of the stronger than previously anticipated 2025 cash flow performance of Discovery Global,” per Warner Bros. Discovery’s proxy statement. WBD said the target amount of net debt for Discovery Global is $17.0 billion as of June 30, 2026, with decreases over time to $16.1 billion as of Dec. 31, 2026.
Netflix and WBD said their deal is still on track to close 12-18 months following the signing of their original agreement on Dec. 4, 2025. The spin off of Discovery Global, which is set to include cable nets like CNN, TNT, TBS, HGTV and Food Network as well as TNT Sports and Discovery+, is expected to be completed in six to nine months.
Netflix’s original bid included $59 billion in debt financing from three banks: Wells Fargo, BNP and HSBC. That was reduced to $34.0 billion as of Dec. 19. With Netflix’s new all-cash offer, that will increase to $42.2 billion, per a Netflix SEC filing.
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The amended, all-cash transaction was unanimously approved by the boards of both Netflix and WBD. The M&A transaction remains subject regulatory approvals in the U.S. and Europe, as well as approval by WBD stockholders.
Netflix’s revised deal comes as David Ellison’s Paramount Skydance has continued to press its case to shareholders for why its $30/share all-cash hostile bid is superior to the Netflix pact, despite the WBD board rejecting eight different offers from Paramount. The Paramount camp has also asserted that its takeover of WBD would face less regulatory pushback than a Netflix-WB combination.
Earlier this month, Paramount filed a lawsuit seeking to compel WBD to disclose financial details of the Netflix deal including how WBD valued the proposed Discovery Global. Paramount also officially declared that it would launch a proxy fight, with plans nominate its own WBD board candidates for election at Warner Bros. Discovery’s annual shareholder meeting who would back the Paramount bid.
In its Jan. 20 proxy filing, WBD said the board’s analysis of “selected public companies” on a sum-of-the-parts basis indicated an approximate implied equity value reference range for Discovery Global of $2.41 to $3.77 per share. Furthermore, it said, an analysis of Discovery Global in the context of a potential future acquisition (based on a selected transactions analysis) indicated Discovery Global is valued at $4.63 to $6.86 per share.
Paramount, in asserting that its $30/share offer beats the Netflix deal, claimed its analysis shows that shares in Discovery Global would have zero value (although it allowed that Discovery Global had a theoretical M&A value of $0.50/share).
In their announcement Tuesday, Netflix and WBD said they have each submitted their Hart-Scott-Rodino filings with the FTC and the Justice Department’s antitrust division and that they are “engaging with competition authorities, including the U.S. Department of Justice and European Commission.” As previously disclosed, the transaction is expected to close 12-18 months from Dec. 5, when Netflix and WBD originally entered into their merger agreement.
David Zaslav, president and CEO of Warner Bros. Discovery, said: “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.“
Netflix co-CEO Ted Sarandos said in a statement, “Our revised all-cash agreement will enable an expedited timeline to a stockholder vote and provide greater financial certainty at $27.75 per share in cash, plus the value from the planned separation of Discovery Global. Together, Netflix and Warner Bros. will deliver broader choice and greater value to audiences worldwide, enhancing access to world-class television and film both at home and in theaters. The acquisition will also significantly expand U.S. production capacity and investment in original programming, driving job creation and long-term industry growth.”
Greg Peters, Netflix’s other co-CEO, added, “Over the last decade, when much of the entertainment industry has contracted, Netflix has grown and invested tremendously in the business of film and television in the U.S. and abroad. This transaction will further fuel that growth and investment. By amending our agreement today, we are underscoring what we have believed all along: not only does our transaction provide superior stockholder value, it is also fundamentally pro-consumer, pro-innovation, pro-creator and pro-growth.”
Under Netflix’s deal with WBD, the streaming giant would acquire the Warner Bros. film and television studios, HBO and HBO Max, and its games division. Since the Warner Bros. deal was announced Dec. 5, Netflix shares have dropped below the “collar” of $97.91/share in the original WBD agreement; in that case WBD shareholders would have received 0.0460 Netflix shares for each WBD share, instead of $4.50 worth of Netflix stock per WBD share. Now that concern is off the table.
Paramount Skydance is offering to buy Warner Bros. Discovery in its entirety (including the TV networks). Paramount’s takeover offers are backed by David Ellison’s father, Oracle co-founder and multibillionaire Larry Ellison, along with partners including RedBird Capital Partners and the sovereign wealth funds of Saudi Arabia, Qatar and Abu Dhabi.
Netflix and WBD said the financing structure of Netflix’s all-cash deal is not subject to review by the Committee on Foreign Investment in the United States (CFIUS), the U.S. government entity that oversees foreign investment in American companies. Paramount has claimed that its offer won’t require CFIUS review because the Arab wealth funds “have agreed to forgo any governance rights” including board representation.
The breakup fees in the Netflix-WBD deal remain unchanged. If WBD backs out of the deal, it must pay a termination fee of $2.8 billion to Netflix. If the deal is blocked by regulators, Netflix is on the hook to pay $5.8 billion to WBD.
Netflix’s deal to buy Warner Bros. has stoked industry fears that the consolidation will lead to job losses and movie theater closures — and would give Netflix tremendous power in Hollywood. Sarandos, as part of his campaign to win over opponents to the megadeal, has committed to keeping Warner Bros. movies in a 45-day theatrical window.
Netflix is scheduled to report Q4 2025 earnings after the market close on Tuesday.
From Variety US