Netflix has entered into a definitive agreement to acquire the studio and streaming assets of Warner Bros. Discovery through an all-cash transaction at $27.75 per share. The revised structure, amended on January 20, 2026 from an original $27.75 per share mixed-consideration proposal, has triggered a competing $30.00 per share hostile tender offer from Paramount Skydance Corporation. Paramount Skydance’s proposal is supported by approximately $40.7Bn of equity commitments, including a $40.4Bn irrevocable personal guarantee from Larry Ellison.
Netflix’s shift to an all-cash offer, combined with a $5.8Bn reverse termination fee, represents a deliberate strategy to enhance deal certainty and discourage competing bids. The revised structure improves execution confidence for Warner Bros. Discovery shareholders while materially raising the cost of interloping transactions.
Transaction Structure and Financing
The transaction was initially announced on December 5, 2025, with mixed consideration valuing Warner Bros. Discovery at $27.75 per share. The proposal implied an equity value of approximately $72.0Bn and an enterprise value of $82.7Bn, inclusive of assumed debt. On January 20, 2026, the parties amended the agreement to convert the consideration to an all-cash offer at the same $27.75 pershare price, removing the equity component.
Under the amended terms, Netflix is expected to acquire Warner Bros. Discovery’s studio and streaming assets, including film and television production operations and streaming platforms. The Company’s linear television networks are expected to be separated into a standalone entity prior to closing, with existing shareholders receiving shares of the spun-off business.
Netflix has secured committed financing to support the all-cash consideration, providing certainty of value to Warner Bros. Discovery shareholders. The financing structure allows Netflix to pursue the acquisition while expanding its content and streaming footprint, subject to regulatory approval.
Competitive Bidding and Hostile Tender Offer
The Warner Bros. Discovery board has repeatedly advised shareholders not to tender into Paramount Skydance’s offer, citing execution risk, leverage concerns and the conditional nature of the proposal despite its higher headline price. Paramount Skydance has extended the expiration of its tender offer to February 20, 2026, providing shareholders additional time to assess the competing transactions.
As of January 27, 2026, approximately 7% of Warner Bros. Discovery shares had been tendered into Paramount Skydance’s $30.00 per share offer, while the remaining 93% had not. Warner Bros. Discovery filed its preliminary proxy statement for the Netflix transaction on January 20, 2026, and a shareholder vote on the Netflix transaction is expected by April 2026.
Paramount Skydance has also initiated a proxy contest, nominating an alternative slate of directors. A central point of disagreement relates to the valuation of Discovery Global, the proposed cable network spin-off. Warner Bros. Discovery estimates the business is worth an additional $3.00–$7.00 per share, while Paramount Skydance has indicated that shareholders should assign minimal value to the asset.
Deal Protection and Breakup Fees
Netflix has agreed to pay Warner Bros. Discovery a reverse termination fee of $5.8Bn should the transaction fail to close due to regulatory issues or other factors within Netflix’s control. The fee represents approximately 8 percent of the transaction’s equity value and ranks among the largest reverse breakup fees agreed in a media sector transaction. By comparison, average breakup fees in recent large-cap M&A transactions have generally ranged between 3 and 5 percent of equity value.
The magnitude of the reverse termination fee underscores Netflix’s confidence in regulatory clearance and materially strengthens certainty of value relative to competing proposals. Under the merger agreement, Warner Bros. Discovery would be required to pay Netflix a $2.8Bn termination fee if it were to pursue an alternative transaction, raising the economic threshold for any superior proposal.
Regulatory Review
Both the Netflix transaction and Paramount Skydance’s competing tender offer remain subject to regulatory review in the United States and internationally. In the U.S., the Department of Justice has issued a Second Request for additional information, extending the review process and delaying the potential closing timeline for either transaction. While the Federal Communications Commission does not have jurisdiction over the transaction, its chairman has publicly raised concerns related to consolidation in the streaming and content markets.
Given the global operations of both Netflix and Warner Bros. Discovery, regulators in jurisdictions including the United Kingdom and the European Union are also reviewing the proposed transaction. Approval in these regions is required for closing, and extended reviews could delay completion or affect overall deal certainty.
Shareholder, Market and Consumer Implications
For Warner Bros. Discovery shareholders, the process presents two distinct alternatives. The Netflix transaction is a board-approved proposal supported by committed financing and expected to proceed to a shareholder vote, subject to regulatory review. Paramount Skydance’s offer provides a higher headline price but remains a hostile tender offer dependent on shareholder participation, and is also subject to regulatory clearance. The ultimate outcome is expected to hinge on regulatory expectations, shareholder voting behavior and Paramount Skydance’s ability to secure sufficient tenders.
From a market perspective, completion of a transaction would concentrate a greater share of content production and streaming distribution within a single platform, explaining the level of regulatory scrutiny. Combining Netflix’s global distribution capabilities with Warner Bros. Discovery’s studio and content assets would strengthen vertical integration between content creation and delivery and could influence how other media and streaming companies evaluate scale, content ownership and distribution strategy.
For consumers, the transaction could affect how content is distributed across streaming platforms. If approved, the combination may result in a broader range of content being offered through fewer platforms, while increasing regulatory focus on competition, pricing and consumer choice. Any consumer impact is expected to depend on regulatory conditions, integration decisions and future pricing strategies following completion.
About DelMorgan & Co. (www.delmorganco.com)
With over $300 billion of successful transactions in over 80 countries, Delmorgn’s Investment Banking professionals have worked on some of the most challenging, most rewarding and highest profile transactions in the U.S. and around the globe. In the upcoming year, we expect more high-quality deals execution for more clients and welcome the opportunity to speak with companies interested in potentially selling their businesses or raising capital.
