Paramount Skydance to Buy Warner Bros. Discovery in $78 Billion Cash Deal
The media company will fund the all-cash purchase with notes, cash on hand, term loans and a previously announced equity financing.
Paramount Skydance Corporation (PSKY) agreed to acquire Warner Bros. Discovery, Inc. (WBD) in an all-cash transaction that will pay WBD common stockholders an estimated $78.0 billion.
Each share is to receive cash equal to $31.00, without interest, plus the Ticking Consideration. The company assumes the transaction will close on October 6, 2026, for purposes of its pro forma financial statements.
Paramount said it intends to use the net proceeds of notes offerings, together with cash on hand, borrowings under previously announced term loan financings, and the net proceeds of a previously announced equity financing, among other things, to finance the purchase price and the repayment of certain existing debt.
The merger was originally announced on February 27, when Paramount said it would acquire WBD to accelerate its ambition of building a next-generation media and entertainment company. In April, a group of select strategic investors was assigned a portion of a $47 billion equity investment, with the PIPE subscription price later updated from a fixed $16.02 a share to a market-referenced price at close, floored at $12.00 and capped at $16.02. Paramount replaced a previously planned rights offering with a dividend of one 10-year warrant per Class B share, exercisable at the syndication price.
The company also said it secured long-term financing commitments of $5 billion in term loans and a $5 billion revolving credit facility, secured against the assets of the combined company at close, and syndicated the remaining $49 billion of bridge financing to 18 global financial institutions, which it intends to replace with additional secured debt across the investment grade and high yield markets prior to closing. On April 23, WBD shareholders voted to approve the merger agreement.
In May, Paramount commenced offers to purchase for cash and to exchange for newly issued notes certain outstanding notes of Discovery Global Holdings, Inc. and Discovery Communications, LLC. For pro forma purposes, it assumed that 100% of the $12.8 billion principal amount of existing WBD notes subject to the exchange offers and $2.4 billion of existing WBD notes subject to the tender offers would be exchanged or tendered in full.
Warner Bros. Discovery reported second-quarter 2026 total revenues of $8.7 billion, a 12% ex-FX decrease from the year-earlier quarter. Distribution revenue rose 1% ex-FX, as dynamic underlying growth in global streaming subscribers was partially offset by continued domestic linear pay TV subscriber declines and the impact of the HBO Max domestic distribution deal renewal with a former related party. Advertising revenue fell 22% ex-FX, and content revenue fell 26% ex-FX, primarily due to lower theatrical revenue at the Studios segment. Net income available to the company was $0.1 billion, which included $1.1 billion of pre-tax acquisition-related amortization of intangibles, content fair value step-up, and restructuring expenses.
Streaming revenue increased 10% ex-FX to $3,079 million, with subscriber-related revenues up 10% ex-FX. Streaming Adjusted EBITDA rose 63% ex-FX to $512 million. Studios revenue decreased 39% ex-FX to $2,328 million, and Studios Adjusted EBITDA decreased 89% ex-FX to $96 million. Global Linear Networks revenue decreased 17% ex-FX to $3,991 million, and segment Adjusted EBITDA decreased 5% ex-FX to $1,446 million.
The company ended the second quarter with $3.4 billion of cash on hand, $33.1 billion of gross debt, and 3.4x net leverage. During the quarter, it repaid in full a $15 billion bridge loan facility with a $13 billion Term Loan B and a €1.7 billion Term Loan B. Free cash flow was $572 million, unfavorably impacted by approximately $350 million of separation and transaction-related items.