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The high-stakes M&A drama surrounding Warner Bros. Discovery (WBD) has entered its decisive final rounds, with the company’s board now agreeing to engage in discussions with David Ellison’s Paramount Skydance (PSKY) to gain crucial clarity on their acquisition intentions. This move comes after WBD’s board had previously rebuffed multiple overtures from PSKY. The central question hanging over these impending negotiations is whether Ellison’s consortium will escalate their bid to surpass the $31 per share mark, a figure that has been hinted at but not definitively committed to in their latest proposal.
On Tuesday, Warner Bros. Discovery formally announced its decision to seek "clarity" from Paramount Skydance regarding their "best and final offer" in what has been characterized as a hostile takeover attempt. Simultaneously, WBD has set March 20, 2026, as the date for a special shareholder meeting to vote on the previously agreed-upon $83 billion deal with Netflix, which aims to acquire WBD’s lucrative studios and the flagship HBO Max streaming service. Despite opening the door to these limited discussions with Paramount, WBD’s board of directors reiterated its unanimous recommendation in favor of the Netflix merger, urging shareholders to reject Paramount Skydance’s most recent offer.
To facilitate these critical discussions, Netflix has granted WBD a narrowly defined waiver under the terms of their existing merger agreement. This waiver permits WBD to engage with Paramount Skydance for a seven-day period, concluding on February 23, 2026. During this expedited negotiating window, WBD intends to "discuss the deficiencies that remain unresolved and clarify certain terms of PSKY’s proposed merger agreement," as stated by the company.
The urgency for clarification stems from Paramount’s latest amended offer, submitted on February 10. This revised bid included a significant sweetener: a promise to pay Warner Bros. Discovery shareholders 25 cents per share, totaling approximately $650 million in cash each quarter, for every quarter that Paramount’s proposed acquisition of WBD extends beyond December 31, 2026. Additionally, Paramount pledged to cover the $2.8 billion termination fee owed to Netflix should WBD shareholders opt for the Paramount offer.
However, the most provocative element of Paramount’s recent maneuvers emerged when a "senior representative for PSKY" allegedly informed a WBD board member that if the WBD board authorized M&A talks, Paramount would agree to pay $31 per share. Crucially, this representative reportedly indicated that this $31 per share figure was not PSKY’s "best and final" proposal. While WBD has not publicly identified the Paramount representative or the WBD director involved in this communication, the implication is clear: Paramount may be willing to go higher.
Warner Bros. Discovery has highlighted that this potential $31 per share valuation, along with "several other matters" mentioned in Paramount’s February 10 letter, are conspicuously absent from the latest merger agreement proposed by PSKY. To ensure absolute clarity on these points, WBD dispatched a formal letter to the Paramount Skydance board on Tuesday. This letter outlines the key unresolved issues and includes draft transaction agreements, compelling Paramount to confirm the precise terms of their offer.
In this letter, WBD CEO David Zaslav and board chairman Samuel Di Piazza Jr. directly addressed the Paramount Skydance board, stating, "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." They emphatically added, "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."
Despite this engagement with Paramount, Warner Bros. Discovery maintains its resolute stance. "There can be no assurance that a definitive transaction will result from WBD’s discussions with Paramount Skydance," the company stated. "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." This underscores the company’s ongoing belief in the superior value proposition of the Netflix deal.
Adding another layer to the complex negotiation, Netflix retains its matching rights as stipulated in the merger agreement. This means that if Paramount were to present a more attractive offer, Netflix has the right to counter with an even higher bid for the Warner Bros. assets.
Netflix, in its own statement on Tuesday, acknowledged the ongoing "distraction" caused by PSKY’s "antics" but expressed confidence in its own deal. "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," the streamer said. Netflix also reiterated its position as having the "only signed, board-recommended agreement with WBD, and ours is the only certain path to delivering value to WBD’s stockholders." The company also raised concerns about Paramount’s projected cost-cutting measures, stating, "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 articulated his company’s guiding principle: "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."
Chairman Samuel Di Piazza Jr. echoed this sentiment, emphasizing the benefits of the Netflix merger: "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."
The initial agreement between Netflix and WBD, announced in early December, was a cash-and-stock deal valued at $27.75 per share for WBD’s film and TV studios, HBO, HBO Max, and its games division. In response to the persistent pressure from Paramount’s hostile takeover campaign, Netflix transitioned this offer to an all-cash proposal last month, signaling its commitment to securing the acquisition. Warner Bros. Discovery has indicated its intention to spin off its Discovery Global segment, encompassing a portfolio of cable networks such as CNN, TNT, TBS, Food Network, and HGTV, along with assets like Discovery+, in the third quarter of 2026, preceding the completion of the Netflix deal.
Paramount’s February 10 amended offer boasts an enterprise value of approximately $108 billion. The financing for this substantial bid is reportedly secured through $43.6 billion in equity commitments from tech mogul Larry Ellison and RedBird Capital Partners, coupled with $54 billion in committed debt financing from major financial institutions including Bank of America, Citigroup, and Apollo Global Management. Furthermore, the bid has garnered backing from sovereign wealth funds of Saudi Arabia, Qatar, and Abu Dhabi.
The special shareholder meeting for WBD to vote on the Netflix pact is scheduled to commence at 8 a.m. Eastern on March 20, 2026. Shareholders of record as of 5 p.m. Eastern on February 4, 2026, will be eligible to cast their votes.
Letter from Warner Bros. Discovery to Paramount Skydance 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.