Warner Bros. Discovery has a number of questions for David Ellison, but the crucial one is this: Will his Paramount Skydance hoist its bid for WBD to over $31 per share?
The M&A jousting over Warner Bros. is entering its final rounds. On Tuesday, Warner Bros. Discovery said its board — after rebuffing multiple overtures from Paramount Skydance — will engage in discussions with the Ellison-led company to “seek clarity” on Paramount’s “best and final offer” in its hostile takeover attempt.
Warner Bros. Discovery also announced March 20, 2026, as the date for the special meeting of shareholders to vote on the proposed $83 billion deal with Netflix, which would acquire WB’s studios and HBO Max. And even as it opens the door to negotiations with Paramount, WBD’s board of directors “continues to unanimously recommend in favor of the Netflix merger,” the company said — and the board also unanimously recommends that shareholders reject Paramount Skydance’s most recent offer.
Netflix has granted WBD a limited waiver under the terms of their merger agreement to permit WBD to engage in discussions with Paramount Skydance for a seven-day period ending on Feb. 23, 2026. During that negotiating window, “WBD will engage with [Paramount Skydance] to discuss the deficiencies that remain unresolved and clarify certain terms of PSKY’s proposed merger agreement,” Warner Bros. Discovery said.
On Feb. 10, Paramount upgraded its hostile $30/share offer for all of WBD to include a promise to pay Warner Bros. Discovery 25 cents per share — roughly $650 million in cash each quarter — for every quarter in the event Paramount’s proposed acquisition of WBD is not closed beyond Dec. 31, 2026. Among other new pledges, Paramount also said it would pay the $2.8 billion termination fee due to Netflix if WBD shareholders accept Paramount’s offer.
Warner Bros. Discovery said that, after Paramount submitted its latest amended offer, a “senior representative for PSKY” informed a WBD board member that if the WBD board authorized M&A talks, Paramount “would agree to pay $31 per share and that the offer was not PSKY’s ‘best and final’ proposal.” (WBD did not identify the Paramount representative or the Warner Bros. Discovery director.)
The $31/share price, along with “several other matters” that Paramount said it would address in its Feb. 10 letter, “are not reflected in the latest merger agreement that PSKY proposed,” according to WBD. To provide “specific clarity in this regard,” WBD on Tuesday sent the Paramount Skydance board a letter spelling out key issues yet to be addressed along with drafts of full transaction agreements for Paramount to confirm the terms of its offer.
WBD wants Paramount Skydance “to clarify your proposal, which we understand will include a WBD per share price higher than $31,” Warner Bros. Discovery CEO David Zaslav and board chairman Samuel Di Piazza Jr. wrote in the letter. “We seek your best and final proposal. To be clear, our Board has not determined that your proposal is reasonably likely to result in a transaction that is superior to the Netflix merger.” (Read the letter below.)
According to Warner Bros. Discovery, “There can be no assurance that a definitive transaction will result from WBD’s discussions with Paramount Skydance. The WBD Board and management team remain resolute in their commitment to maximizing value for shareholders and continue to recommend shareholders vote FOR the merger with Netflix.”
Netflix retains its matching rights as specified by the merger agreement, which means the streamer could come back with a higher offer for the WB assets to counter Paramount.
“While we are confident that our transaction provides superior value and certainty, we recognize the ongoing distraction for WBD stockholders and the broader entertainment industry caused by PSKY’s antics,” Netflix said in a statement Tuesday. “Accordingly, we granted WBD a narrow seven-day waiver of certain obligations under our merger agreement to allow them to engage with PSKY to fully and finally resolve this matter.”
Netflix added, “This does not change the fact that we have the only signed, board-recommended agreement with WBD, and ours is the only certain path to delivering value to WBD’s stockholders.” Regarding the significant cost-cutting Paramount has outlined for a merged WBD-Paramount, Netflix said: “A business plan that is dependent upon $16 billion in cost savings should be an unmistakable red flag for regulators, policymakers, union leaders and creatives.”
WBD’s Zaslav said in a statement: “Throughout the entire process, our sole focus has been on maximizing value and certainty for WBD shareholders. Every step of the way, we have provided PSKY with clear direction on the deficiencies in their offers and opportunities to address them. We are engaging with PSKY now to determine whether they can deliver an actionable, binding proposal that provides superior value and certainty for WBD shareholders through their best and final offer.”
Di Piazza, WBD’s chairman, added, “As announced today, we continue to believe the Netflix merger is in the best interests of WBD shareholders due to the tremendous value it provides, our clear path to achieve regulatory approval and the transaction’s protections for shareholders against downside risk. With Netflix, we will create a brighter future for the entertainment industry – providing consumers with more choice, creating and protecting jobs and expanding U.S. production capacity while increasing investments to drive the long-term growth of our industry.”
Netflix announced its $27.75/share cash-and-stock agreement to acquire Warner Bros.’s film and TV studios, HBO and HBO Max, and WBD’s games division in early December. Amid pressure from Paramount’s hostile takeover campaign, Netflix last month changed that to an all-cash offer. Warner Bros. Discovery has said it expects to spin off Discovery Global, which will comprise CNN, TNT, TBS, Food Network, HGTV and other cable nets as well as other assets including Discovery+, in the third quarter of 2026, prior to the Netflix deal close.
Paramount said its Feb. 10 amended offer, with an enterprise value of about $108 billion, is “fully financed” by $43.6 billion of equity commitments from Larry Ellison (the mega-billionaire tech mogul who is David’s father) and RedBird Capital Partners, alongside $54 billion of committed debt financing from Bank of America, Citigroup and Apollo Global Management. Other backers of Paramount’s WBD bid include the sovereign wealth funds of Saudi Arabia, Qatar and Abu Dhabi.
WBD’s March 20 special shareholders meeting to vote on the Netflix pact is scheduled to begin at 8 a.m. Eastern. WBD shareholders of record as of 5 p.m. Eastern on Feb. 4, 2026, will be entitled to vote at the special meeting; more info is at VoteWBDNetflix.com.
Here’s the text of the letter Warner Bros. Discovery sent to Paramount Skydance’s board:
Dear Members of the PSKY Board:
The Board of Directors of Warner Bros. Discovery (WBD) is fully committed to delivering a superior transaction to our shareholders. Since our decision last year to separate our Streaming & Studios businesses from our Global Linear Networks business, we have actively explored a wide range of alternatives, including through a publicly-announced strategic review process in which Paramount Skydance (PSKY) participated, having initially approached WBD in September 2025. Our agreed transaction with Netflix offers superior value for our shareholders, allows us to achieve our strategic goal to separate WBD’s businesses, offers a high degree of certainty with minimal risk to the businesses in the interim and has essentially no financing risk. The WBD Board continues to unanimously recommend that our shareholders approve the Netflix transaction, as reflected in the definitive proxy statement we have filed with the SEC today.
On February 10, PSKY amended its tender offer for WBD common stock. While this amendment addresses some of the concerns that WBD had identified several months ago, it still contains many of the unfavorable terms and conditions that were in the draft agreements submitted by PSKY on December 4, 2025 and December 22, 2025 and twice unanimously rejected by our Board. PSKY indicated in its February 10 letter to the WBD Board a willingness to address some of those concerns, but does not do so in its proposed merger agreement, leaving WBD with vague assurances of intention. Other important issues raised several times with PSKY are unchanged from your prior submissions. On February 11th, a senior representative of your financial advisor communicated orally to a member of our Board that PSKY would agree to pay $31 per WBD share if we engage with you, and that $31 is not PSKY’s best and final proposal.
We are writing to inform you that Netflix has agreed to provide WBD a waiver of certain terms of the Netflix merger agreement to permit us, through February 23, to engage with PSKY to clarify your proposal, which we understand will include a WBD per share price higher than $31. We seek your best and final proposal. To be clear, our Board has not determined that your proposal is reasonably likely to result in a transaction that is superior to the Netflix merger. We continue to recommend and remain fully committed to our transaction with Netflix and have scheduled a special meeting of our shareholders on March 20, 2026 to vote on the Netflix merger agreement.
As you know, it is typical and expected for a would-be overbidder to accept the substantive terms of the merger agreement that the target company has already agreed with its existing merger party. To provide you with specific clarity in this regard, we have prepared, and our legal counsel will deliver to you today, copies of transaction agreements that conform to this approach, address key issues for the WBD Board in prior PSKY offers and incorporate the terms and assurances reflected in your February 10 letter, as well as certain other changes to reflect matters unique to your proposal. Attached at the end of this letter is a business summary of these changes. As part of your binding proposal, the WBD Board needs confirmation that you are prepared to sign our proposed agreements. We encourage you to be direct and transparent with your best and final value and other terms in that binding proposal.
During this seven-day period – as we consistently did during the strategic review process last year – we welcome the opportunity to engage with you and expeditiously determine whether PSKY can deliver an actionable, binding proposal that provides superior value, transaction certainty and interim protection for WBD’s businesses to Warner Bros. Discovery shareholders.
On behalf of the WBD Board of Directors,
Samuel A. DiPiazza, Jr.
Board Chair
David Zaslav
President and Chief Executive Officer
Summary of Changes to Transaction Agreements
Below is a summary of the principal business changes reflected in the transaction agreements provided by WBD today, as compared to the draft agreements provided by PSKY in its tender offer. Many of these reflect terms proposed by PSKY in its public statements but not reflected in its merger agreement; others align the draft agreement with the terms of the Netflix merger agreement.
- Refinancing and Junior Lien Notes: PSKY to bear expenses in connection with any junior notes liability management exercise when incurred, or pay the $1.5 billion financing fee to WBD at the time it would be due (December 30, 2026). The Netflix merger agreement does not require WBD to bear any cost in this regard.
- Bridge Refinancing: PSKY’s consent will not be required for WBD’s bridge refinancing, which will consist of dollar and euro term loan debt and bonds on market terms available at the time of the refinancing. The bond component will have a tenor of no more than 7 years, and will be non-callable for no more than 3 years, and the loan component will be non-callable for no more than 1 year. This provision is substantially more favorable to PSKY than the terms of the Netflix Merger Agreement, which permit WBD full refinancing flexibility.
- Material Adverse Effect: Consistent with the statement in PSKY’s Feb. 10 letter that it is “prepared to address any concerns WBD has regarding the impact of Discovery Global’s performance on closing certainty,” the “Company Material Adverse Effect” definition excludes effects attributable to the performance of WBD’s Global Linear Networks business (consistent with the Netflix Merger Agreement).
- Equity Cure to Support Debt: The significant debt financing and resulting pro forma leverage in the PSKY offer create material closing uncertainty, particularly when compared to Netflix’s investment grade credit rating and large positive free cash flow. PSKY has repeatedly stated that these concerns are not serious, noting the personal wealth of your lead equity sponsor and the credibility of your lending banks. To reflect your assurances, the draft agreements provide that in the event the transaction would not close due to the debt financing being unavailable, additional equity will be funded to enable closing to occur.
- Interim Operating Covenants: The interim operating covenants should not require consent from PSKY in order for WBD to operate its business in the ordinary course between signing and closing. The additional covenants you have proposed are not part of our agreement with Netflix, and are not accepted, as they further risk the certainty of closing.
- Equity Financing Certainty: Our changes to the PSKY equity documents reflect the need for absolute clarity as to funding obligations and certainty of funding at closing, or to pay damages if due.
- Equity Syndication: WBD will receive notice and full information regarding any equity syndication, and its consent will be required for any direct or indirect syndication that would require regulatory approvals or delay closing.
