How Netflix forced Paramount to cough up more for Warner Bros.

By Hannah Miller and Molly Schuetz | Bloomberg

David Ellison finally got what he wanted but his prize didn’t come cheap.

His pursuit of Warner Bros. Discovery Inc. was nearly thwarted by a wealthy rival suitor, Netflix Inc., which ultimately forced Ellison’s Paramount Skydance Corp. to shell out at least $31 billion more than it planned for the legendary Hollywood studio.

The staggering price, representing one of the biggest media deals in the past decade, came to $31-a-share in cash, or $111 billion including debt, and was high enough for Netflix to walk away rather than increase its offer of $27.75.

Ellison had to add in other sweeteners too, including securing additional backing of his billionaire father, taking on $57.5 billion in debt and agreeing to pay the $2.8 billion breakup fee to Netflix.

“We engaged with four bidders, which led to eight price increases and have thus far achieved a 63% increase in value versus the first offer received in September, delivering significant value for WBD shareholders throughout the process,” Warner Bros. Chief Executive Officer David Zaslav told investors on a recent call to discuss earnings.

Some analysts thought Paramount would have to raise its bid to as high as $32 a share to win out after Warner Bros. signed a deal with Netflix and claimed its offer was superior.

“If you had asked me at the beginning of this process, is this company going to sell for 30 bucks? I would’ve said, ‘No freaking way,’” said Douglas Arthur, an analyst at Huber Research Partners.

Paramount’s proposal values Warner Bros. at 12.5 times forward earnings before interest, tax, depreciation and amortization, compared with Walt Disney Co.’s purchase of 21st Century Fox Corp. in 2019 at around 14.5 times, according to Bloomberg Intelligence analyst Geetha Ranganathan.

Here’s how Ellison got there (selected timeline):

• Sept. 14, 2025: Offers $19 a share in a mix of cash and stock
• Sept. 30: Larry Ellison comes into the picture; Paramount raises bid to $22 a share with 67% in cash and adds in a reverse termination fee of $2 billion if regulatory approvals aren’t received.
• Oct. 13: Offers $23.50 a share and 80% cash.
• Nov. 20: Offers $25.50 a share with option for 85% cash and 15% stock.
• Dec. 4: Offers for $30 a share all in cash
• Dec. 5: Netflix agrees to buy Warner Bros. studio and streaming business for $27.75 a share in cash and stock
• Dec. 8: Paramount launches tender offer at $30 a share
• Dec. 22: Larry Ellison provides personal guarantee of $40 billion
• Jan. 20, 2026: Netflix amends $27.75 a share offer to make it all cash
• Feb. 10: Paramount offers to pay the $2.8 billion breakup fee Warner Bros. would need to pay to Netflix if a deal falls apart.
• Feb. 24: Warner Bros. announces Paramount’s new offer of $31 a share
• Feb. 26: Warner Bros. determines Paramount’s offer is superior to Netflix. Netflix declines to raise bid.

In its final proposal, Paramount also agreed to pay a “ticking fee” of 25 cents a share for each quarter beyond Sept. 30 that the deal doesn’t close. The company will eliminate Warner Bros.’ potential $1.5 billion financing cost associated with its debt exchange offer and the Ellison Trust is providing a $45.7 billion equity commitment, personally backed by Oracle Corp. Chairman Larry Ellison. Bank of America Corp., Citigroup Inc. and Apollo Global Management are providing a $57.5 billion debt commitment.

Paramount could be on the hook for another $7 billion if antitrust authorities don’t approve the deal.

Veena Ali-Khan at Bloomberg contributed to this report.