Netflix Makes Shock All-Cash Deal to Take Over Warner Bros. Discovery Studios and HBO Max

Netflix is making a major move to secure its purchase of Warner Bros. Discovery assets by switching its offer to all cash.

On Tuesday, Netflix and WBD announced that they have changed their original agreement. Netflix will now pay $27.75 per share in cash for the Warner Bros. studios and the HBO Max business. This change is designed to stop a rival hostile takeover attempt by Paramount Skydance.

According to the announcement, the total value of the deal sits at $82.7 billion. When the two companies first announced their plan on December 5, the deal was a mix of cash and stock. However, that original plan had a weakness because the value could drop if Netflix’s stock price went down. By switching to 100% cash, the companies said they are providing certainty for WBD shareholders.

This aggressive move comes as David Ellison’s Paramount Skydance continues to push hard for its own deal. Paramount has offered $30 per share in all cash to buy the entire company, including the cable networks. The board at WBD has already rejected eight different offers from Paramount, but the rival company is not giving up. Paramount recently filed a lawsuit to get more financial details and plans to nominate its own people to the WBD board to force a vote.

The structure of the Netflix deal is different from what Paramount wants. Netflix is only buying the movie and TV studios, the games division, and HBO Max. Before the sale happens, WBD will spin off a new company called Discovery Global. This new company will hold the cable networks like CNN, TNT, HGTV, and the Discovery+ streaming service. As part of the new agreement on Tuesday, Netflix agreed that Discovery Global will carry $260 million less debt than originally planned because those channels are performing better than expected.

The companies are trying to move fast. WBD filed papers with the SEC on Tuesday to support a faster timeline. They expect shareholders will be able to vote on the deal by April 2026. If everything goes according to plan, the spin-off of the cable channels will happen in six to nine months, and the Netflix purchase will close 12 to 18 months from the original December signing.

David Zaslav, the CEO of Warner Bros. Discovery, seemed very positive about the new terms. He said, Today’s revised merger agreement brings us even closer to combining two of the greatest storytelling companies in the world and with it even more people enjoying the entertainment they love to watch the most.

The leadership at Netflix also weighed in on the benefits of the cash offer. Netflix co-CEO Ted Sarandos said, Our revised all-cash agreement will enable an expedited timeline to a stockholder vote and provide greater financial certainty at $27.75 per share in cash, plus the value from the planned separation of Discovery Global. He added that the deal would help them deliver broader choice and greater value to audiences worldwide, enhancing access to world-class television and film both at home and in theaters.

Greg Peters, the other co-CEO at Netflix, pushed back against the idea that the merger is bad for the industry. He stated, By amending our agreement today, we are underscoring what we have believed all along: not only does our transaction provide superior stockholder value, it is also fundamentally pro-consumer, pro-innovation, pro-creator and pro-growth.

There are still hurdles to clear. The deal needs approval from regulators in the United States and Europe. Paramount has argued that a Netflix merger would face harder challenges from the government. However, Netflix and WBD said they have already submitted necessary filings to the Justice Department and the Federal Trade Commission.

The stakes are high for everyone involved. If WBD decides to back out of the deal, they have to pay Netflix a fee of $2.8 billion. On the other hand, if government regulators block the deal, Netflix must pay WBD $5.8 billion. To help ease fears that this merger will hurt movie theaters, Ted Sarandos has promised that Warner Bros. movies will still play in theaters for 45 days.

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