Netflix upgrades Warner Bros. deal from $83 billion to all cash

Netflix has officially agreed to pay all cash for Warner Bros. studios and HBO Max operations. Discovery – a move aimed at thwarting rival Paramount Skydance’s takeover campaign.

Netflix and WBD announced Tuesday that they have finalized their definitive agreement for Netflix’s proposed acquisition of Warner Bros. assets. changed to a cash transaction of $27.75 per share. The deal still has an enterprise value of $82.7 billion. The companies said the revised agreement “simplifies the transaction structure, provides greater value certainty for WBD shareholders and accelerates the path to a WBD shareholder vote.”

Netflix’s original deal with WBD, announced on December 5, was for approximately 84% in cash, while Paramount Skydance has offered 100% in cash. One relative weakness of the Netflix pact as originally drafted: If Netflix’s shares fell below a certain threshold, the payout to WBD shareholders would be lower.

Netflix’s all-cash deal “provides greater certainty about the value WBD shareholders will receive at closing, eliminating market-based variability,” Netflix and WBD said. Additionally, the revised deal terms will facilitate a “faster path” to a WBD shareholder vote on the Netflix deal: shareholders will be able to vote on the proposed transaction by April 2026. On Tuesday, WBD filed a preliminary proxy statement with the SEC “in support of this accelerated timeline.”

In another change, Netflix agreed to reduce by $260 million the specified amount of net debt to be carried by Discovery Global — the cable TV network entity to be spun off ahead of Netflix’s acquisition of WB Studios and HBO Max. That was “in light of Discovery Global’s stronger than previously expected cash flow performance through 2025,” according to Warner Bros’ proxy statement. Discovery. WBD said the target net debt for Discovery Global is $17.0 billion at June 30, 2026, with a decline over time to $16.1 billion at December 31, 2026.

Netflix and WBD said their deal remains on track to close 12 to 18 months after signing their original agreement on December 4, 2025. The Discovery Global spinoff, which will include cable networks such as CNN, TNT, TBS, HGTV and Food Network, as well as TNT Sports and Discovery+, is expected to close within six to nine months.

Netflix’s original offer included $59 billion in debt financing from three banks: Wells Fargo, BNP and HSBC. That was reduced to $34.0 billion as of December 19. With Netflix’s new cash offering, that will increase to $42.2 billion, according to a Netflix SEC filing.

The amended all-cash transaction was unanimously approved by the boards of both Netflix and WBD. The M&A transaction remains subject to regulatory approval in the US and Europe, as well as WBD shareholder approval.

Netflix’s revised deal comes as David Ellison’s Paramount Skydance continues to press shareholders on why its hostile $30 per share offer is superior to the Netflix pact, despite WBD’s board rejecting eight different offers from Paramount. The Paramount camp has also argued that the WBD acquisition would face less regulatory burden than a Netflix-WB combination.

Earlier this month, Paramount filed a lawsuit to force WBD to reveal financial details of the Netflix deal, including how WBD valued the proposed Discovery Global. Paramount also officially stated that it would launch a proxy fight, with plans to nominate its own WBD board candidates for election at Warner Bros.’ annual shareholder meeting. Discovery, which would support Paramount’s bid.

In its Jan. 20 proxy filing, WBD said the board’s analysis of “select publicly traded companies” on a sum-of-the-parts basis indicated an estimated implied benchmark stock value for Discovery Global of $2.41 to $3.77 per share. Additionally, an analysis of Discovery Global in the context of a potential future acquisition (based on an analysis of selected transactions) indicated that Discovery Global is valued at $4.63 to $6.86 per share.

Paramount claimed that its $30 per share offer exceeds the Netflix deal and claimed that its analysis shows that the shares in Discovery Global would have a value of zero (although it admitted that Discovery Global had a theoretical M&A value of $0.50/share).

In their announcement Tuesday, Netflix and WBD said they have each filed their Hart-Scott-Rodino charges with the FTC and the Justice Department’s antitrust division and are “engaging in discussions with competition authorities, including the U.S. Department of Justice and the European Commission.” As previously disclosed, the transaction is expected to take 12 to 18 months from December 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 bringing together two of the largest storytelling companies in the world and with them even more people enjoying the entertainment they love most.”

Netflix co-CEO Ted Sarandos said in a statement: “Our revised all-cash agreement will enable an accelerated timeline to a shareholder vote and provide greater financial certainty of $27.75 per share in cash, plus the value of the planned separation from Discovery Global. Together, Netflix and Warner Bros. will deliver broader choice and greater value to global audiences, improving access to world-class television and film both at home and in theaters. The acquisition will also expand U.S. production capacity and investments in original programming significantly, stimulating long-term job creation and industrial growth.”

Greg Peters, Netflix’s other co-CEO, added: “Over the past decade, as much of the entertainment industry has shrunk, Netflix has grown and invested heavily in the film and television sector in the US and beyond. This transaction will further fuel that growth and investment. By amending our agreement today, we are underscoring what we have believed all along: our transaction not only delivers superior shareholder value, but is also fundamentally pro-consumer, pro-innovation, pro-creator and pro-growth.”

Under Netflix’s deal with WBD, the streaming giant would acquire Warner Bros.’s film and television studios, HBO and HBO Max, and its games division. Since the deal with Warner Bros. was announced on December 5, Netflix shares have fallen below the “collar” of $97.91/share in the original WBD deal; in that case, WBD shareholders would have received 0.0460 Netflix shares for each WBD share, instead of $4.50 worth of Netflix shares per WBD share. Now that concern is off the table.

Paramount Skydance Offers to Buy Warner Bros. Discovery in its entirety (including the TV networks). Paramount’s takeover offer is backed by David Ellison’s father, Oracle co-founder and multi-billionaire 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 agency that oversees foreign investments in U.S. companies. Paramount has argued that its bid does not require a CFIUS review because the Arab wealth funds “have agreed to waive all board rights,” including board representation.

The termination fees in the Netflix-WBD deal remain unchanged. If WBD pulls out of the deal, it will have to pay a $2.8 billion termination fee to Netflix. If the deal is blocked by regulators, Netflix will be on the hook to pay WBD $5.8 billion.

Netflix’s deal to acquire Warner Bros. has fueled industry fears that the consolidation will lead to job losses and cinema closures – and give Netflix enormous power in Hollywood. Sarandos, as part of his campaign to win over opponents of the mega deal, has committed to keeping Warner Bros. films within a 45-day theatrical window.

Netflix is ​​expected to report fourth-quarter 2025 results after the market closes on Tuesday.