Paramount Skydance Wins Legal Battle Over $110 Billion Warner Bros. Acquisition

The merger agreement (opens in a new tab) was executed on 27 February 2026 by Paramount Skydance, WBD and Prince Sub Inc., a wholly owned Paramount merger subsidiary. At completion, Prince Sub merges into WBD and WBD survives as a wholly owned Paramount subsidiary. This is a statutory merger, not the tender offer Paramount had previously pursued. Paramount terminated that tender offer when the signed merger agreement was announced, and no WBD shares were accepted under it.

Eligible WBD Series A shares convert into US$31.00 in cash without interest, subject to customary exclusions and appraisal elections. WBD stockholders approved the agreement on 23 April 2026 (opens in a new tab) with 1,742,843,087 votes for, 16,260,135 against and 2,371,121 abstentions. The separate advisory vote on merger-related executive compensation did not pass, but it was non-binding and not a closing condition.

On 21 September, Paramount, WBD and the twelve state attorneys general filed a joint motion (opens in a new tab) seeking entry of a consent decree and dissolution of the July no-close order. The California Attorney General described the settlement as pending court approval. The status at 22 September was therefore signed, shareholder-approved and settled in principle, with closing to follow court action.

• –Signed agreement. Completed. One-step all-cash merger dated 27 February 2026.
• –WBD shareholder vote. Completed. Merger agreement approved on 23 April 2026.
• –State settlement. Filed. Consent decree and no-close dissolution requested on 21 September.
• –Transaction close. Pending. To follow court entry of the decree and dissolution of the no-close order.

Paramount’s SEC-filed transaction announcement (opens in a new tab) stated US$81 billion of equity value and US$110 billion of enterprise value. Its later 10-Q (opens in a new tab) expressed the signing-date equity value more precisely as US$80.9 billion and confirmed that Paramount will assume WBD net debt. Subtracting equity value from enterprise value gives US$29.1 billion of implied signing-date net debt, an Acquiry calculation from the company’s two disclosed valuation figures.

WBD later reported US$33.1 billion of gross debt, US$3.4 billion of cash and US$29.7 billion of net debt at 30 June 2026 in its Q2 earnings release (opens in a new tab). That quarter-end figure is close to the implied signing bridge, but the dates, cash balances and enterprise-value adjustments differ. Public materials do not yet provide a final closing sources-and-uses bridge, so the two are best read side by side rather than forced into equality.

Reading the 7.5× headline multiple

The announced 7.5× multiple is based on fully synergized 2026 EBITDA, not a trailing reported combined EBITDA figure. Dividing US$110 billion by 7.5× implies approximately US$14.7 billion of fully synergized 2026 EBITDA, an Acquiry back-solve of a management valuation basis. Separately, Paramount’s investor presentation (opens in a new tab) said it expected US$79 billion of net debt and 4.3× net debt to EBITDA at closing on a synergized basis, which back-solves to approximately US$18.4 billion. Those two implied denominators come from different management constructs and are not interchangeable.

If closing occurs after 30 September 2026, the merger consideration increases by US$0.00277778 per eligible share for each elapsed calendar day, capped at US$0.25 per share for each 90-day period. Applying the formula to the 2,506,768,389 shares outstanding on the special-meeting record date produces a modelled US$6.96 million per day. The actual closing population may differ because of cancelled shares, appraisal elections and equity-award treatment. No ticking amount had accrued on 22 September.

At signing, the Lawrence J. Ellison Revocable Trust committed up to US$46.72 billion (opens in a new tab), subject to increases for specified ticking and contingent amounts, and RedBird committed US$250 million. Paramount’s June-quarter 10-Q then described US$54 billion of committed acquisition debt facilities: a US$49 billion 364-day senior secured bridge, US$2.5 billion of three-year Term A loans and US$2.5 billion of five-year Term A loans. A separate US$5 billion five-year revolver is intended for general corporate purposes.

Paramount says the bridge is intended to be reduced or replaced with permanent financing, subject to market conditions and timing. It has also been running WBD note exchange and cash tender offers tied to closing. On 21 September, Paramount extended those offers to 2 October (opens in a new tab) and reported that 66.87% of eligible tender-offer notes and 75.12% of eligible exchange-offer notes had been tendered as of 18 September. Those were participation snapshots, not final settlement results, and they show strong early bondholder engagement.

Paramount also paid Netflix US$2.8 billion in Q1 2026 on WBD’s behalf to terminate the prior Netflix-WBD agreement, and recorded the payment as advance consideration to be allocated to the acquired WBD assets and liabilities. It is economically relevant to the acquisition, but it sits outside the contractual US$31.00 per-share merger consideration.

Delay carries two separate costs. The contractual ticking payment begins only after 30 September. Paramount also estimated in its 8 September update (opens in a new tab) that delay harm, including ticking and incremental financing costs, could reach US$1.88 billion. That is a company claim, not a realized cost or an independent estimate, and it explains why both parties are motivated to close promptly once the court acts.

For the Successor quarter ended 30 June 2026, Paramount reported (opens in a new tab) US$6.913 billion of revenue, US$1.099 billion of company-defined adjusted EBITDA and US$258 million of free cash flow. It also reported US$1.627 billion of cash and US$15.156 billion of balance-sheet debt, with US$16.430 billion of debt face value. Paramount’s guidance for full-year 2026 was US$30.0 billion of revenue and US$3.8 billion to US$3.9 billion of adjusted EBITDA across predecessor and successor periods.

WBD reported US$8.717 billion of Q2 revenue, US$1.879 billion of company-defined adjusted EBITDA, US$848 million of operating cash flow and US$572 million of free cash flow. It ended the quarter with US$3.4 billion of cash, US$33.1 billion of gross debt, US$29.7 billion of net debt and 3.4× net leverage against US$8.8 billion of most-recent-four-quarters adjusted EBITDA under its own definitions.

Adding the two revenue figures gives US$15.630 billion. That Acquiry calculation is useful as a scale indicator only. Paramount’s Successor presentation, eliminations, intercompany arrangements, accounting policy differences and acquisition adjustments mean it should not be labelled pro forma revenue. The same caution applies even more to adjusted EBITDA, because each company excludes a different set of items.

Paramount’s forward leverage case is the decision point. Management expects US$79 billion of net debt at closing, 4.3× net debt to EBITDA on a fully synergized basis, a minimum US$5 billion of cash at completion and approximately 3.0× leverage within three years. Each is a management target, and the final funded debt, cash, rights-offering take-up, cost to achieve and realized synergy schedule will confirm the trajectory after closing.

Paramount’s announced operating plan is to keep both studios and target 15 theatrical features per studio each year. It expects the combined portfolio to include Paramount+, HBO Max and Pluto, while continuing third-party content licensing and maintaining a film library of more than 15,000 titles. The rights package cited by management spans NFL, Olympics, UFC, PGA Tour, NHL, college sports and Champions League coverage.

Four layers of distribution value

1. 1.Franchise development can move across theatrical, premium streaming, free ad-supported streaming and linear channels.
2. 2.Advertisers can buy a broader reach package across the combined television and digital inventory.
3. 3.Sports rights can support both subscription retention and live advertising.
4. 4.A global content library can be licensed externally rather than kept entirely behind owned services.

These are strategic options rather than quantified revenue synergies, and they are where the combination's upside sits beyond cost savings.

Paramount expects more than US$6 billion of synergies from technology integration, a single ERP, consolidated streaming stacks, procurement, real estate and broader operating efficiencies. It targets delivery within three years and investment-grade credit metrics over the same period. The savings phasing, cost to achieve, headcount effect and any revenue-synergy target have not yet been published.

The savings plan and the proposed state remedy point in the same direction. The remedy protects output, windows, studio lots, cable negotiation separation and editorial structures, which steers management towards technology, procurement, facilities and duplicated overhead rather than content-volume reduction. Delivering the full target through those levers while keeping creative output strong is the central integration task, covered in the consent decree chapter.

The proposed consent decree (opens in a new tab) sets an output floor of 30 U.S. theatrical releases in each of the first two commitment years and 32 in each of the next three. Within those totals, the combined company must deliver 20 wide releases in each of years one and two and 21 in each of years three through five, at least four independent films each year, a minimum 45-day theatrical window and a 90-day subscription-video-on-demand holdback for counted films. Across five years, the minimums equal 156 films, 103 wide releases and 20 independent films.

The decree also requires at least US$300 million of incremental U.S. production spending each year against the companies’ 2025 baseline, or US$1.5 billion across the five commitment years. It proposes US$9.5 million a year for workforce and community investment, totalling US$47.5 million, and a US$5 million annual independent-film acquisition fund, totalling US$25 million. These are proposed post-close commitments, not amounts already spent.

An uncured film-output shortfall has two consequences. After a six-month cure period, the company can be required to divest all Miramax ownership within 12 months. Separately, it owes US$30 million per missing film, with 50% allocated to designated union health and retirement trusts, 40% to the Motion Picture & Television Fund and 10% to a state antitrust fund. No Miramax sale or penalty was due at the reference date because the decree had not been entered and no post-close shortfall had occurred.

For basic cable, Paramount and Warner portfolios must be negotiated separately, tying is prohibited and confidential affiliate-fee information cannot be shared across the two negotiating groups during the commitment period. The decree also proposes an internal compliance monitor, an independent monitoring trustee and a five-member News Editorial Independence Board for CBS News and CNN within 180 days after closing.

The U.S. Department of Justice closed its investigation (opens in a new tab) on 12 June 2026. The European Commission (opens in a new tab) cleared the transaction with conditions, including a post-close timetable for Paramount Pictures International to withdraw from UIP theatrical distribution arrangements in the EEA. The UK Competition and Markets Authority (opens in a new tab) cleared the anticipated acquisition on 6 August, and its case page was marked closed by 17 August.

Paramount said on 8 September that all merger-agreement closing conditions had been satisfied and litigation was the remaining barrier. The later settlement filing is the most current procedural record. It asks the court to enter the decree and dissolve the no-close order, and states that the companies may close only after those steps. Acquiry therefore treats the buyer’s condition-satisfaction statement as company-reported context, with closing to follow court action.

Paramount’s own filings identify the core integration priorities: combining technologies, systems, organizations, procedures, policies, operations and cultures; eliminating duplicated programs; retaining key personnel; avoiding unanticipated costs and liabilities; and keeping customers and creative talent. As with any combination of this size, the benefits and synergies may arrive on a different schedule or scale than planned.

Execution watch list

• –Court docket. Confirm entry of the consent decree and dissolution of the state no-close order.
• –30 September 2026. Tick trigger: contractual per-share consideration starts increasing if closing has not occurred.
• –2 October 2026. Expiration date for the WBD note exchange and tender offers, unless extended again.
• –At closing. Confirm funded debt, permanent refinancing, closing cash, rights-offering outcome and final sources and uses.
• –Within 21 days of closing. Proposed deadline for the internal compliance monitor.
• –Within 180 days of closing. Proposed deadline for the CBS News and CNN independence board.
• –Within 13 months. The required UIP exit in the EEA.
• –First five commitment years. Film counts, U.S. spending, cable firewalls, workforce funds and any cure notice.

Paramount has largely solved the consent problem. It has a signed agreement, shareholder approval, major-jurisdiction clearances, committed financing and filed litigation settlements. The remaining legal step is narrower but still real: court entry of the decree and dissolution of the no-close order, which is why we describe the deal as settled rather than closed.

The price rests on the synergy denominator. At US$110 billion of reported enterprise value, the company’s 7.5× fully synergized multiple embeds substantial execution before it becomes comparable with a conventional reported EBITDA multiple, and the disclosed leverage target is similarly synergy-dependent. Financing and integration are one story here: each run-rate saving delivered also accelerates deleveraging.

The strategic assets are difficult to replicate: two global studios, premium and free streaming, major news operations, sports rights, advertising inventory and a deep library. That distribution strength can improve franchise monetization and subscriber retention. Management has also agreed, subject to court entry, to preserve output, windows, studio infrastructure, cable separation and editorial governance, so value will come from systems, procurement and scale rather than the easiest cost cuts.