Paramount Buys Warner Bros. for $110B // What It Means for the Creator Economy

By Chris Erwin

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Let’s break it down…

–SELLER: Warner Brothers Discovery (WBD)–

Overview

• Global media and entertainment company spanning film/TV production and distribution across theatrical, linear (cable), and streaming

• Formed in 2022 through the merger of WarnerMedia (spun off from AT&T) and Discovery, combining premium scripted IP with scaled unscripted networks

• Leading IP portfolio including Harry Potter, DC, and Game of Thrones; additional brands include Discovery Channel, HGTV, TNT, and CNN

• Led by CEO David Zaslav

• ~35,000 employees

• HQ in New York

Company Highlights

• 95M+ global direct-to-consumer subscribers across Max and Discovery+

• 200+ countries and territories reached through distribution and licensing

• 30+ linear networks including CNN, TNT, TBS, Discovery, HGTV, Food Network, and TLC

• 100+ years of Warner Bros. film and television library content

• 15,000+ film and television titles in owned and controlled catalog

• 30+ theatrical releases annually across Warner Bros. and New Line Cinema

• Significant cost restructuring post-merger, including $3B+ in targeted synergies

Founding Story

• Warner Bros. was founded in 1923 by brothers Harry, Albert, Sam, and Jack Warner as a film production and distribution company

• Discovery was founded in 1985 by John Hendricks, initially focused on nonfiction and educational television programming

• Warner Bros., HBO, CNN, and Turner Broadcasting were assembled under one roof over decades and eventually landed inside AT&T, which acquired the parent company Time Warner for ~$85B in 2018 as part of a telecom-media bet

• In 2022, WarnerMedia was spun off from AT&T and merged with Discovery in a ~$43B transaction to form Warner Bros. Discovery

Business Lines / Services

• Studio & Film Production…

• Produces and distributes films through Warner Bros. Pictures, New Line Cinema, DC Studios, and animation units

• Television Production…

• Creates scripted and unscripted content through Warner Bros. Television and Discovery production studios

• Streaming Platforms…

• Operates HBO Max / Max and discovery+ platforms offering on-demand film, TV, and original content

• Linear Television Networks…

• Portfolio of cable networks including CNN, TNT, TBS, HGTV, Food Network, Discovery Channel, and others

• Sports & Live Broadcasting…

• Broadcast rights and production for live sports including NBA, NHL, and international sports programming

• Content Library & IP Portfolio…

• Owns one of the largest media libraries globally, including franchises like DC, Harry Potter, HBO originals, and Discovery content

Business Model

• Advertising…

• Direct-sold and programmatic advertising across linear TV networks and ad-supported streaming tiers

• Subscription Revenue…

• Monthly subscription fees from streaming platforms (Max, Discovery+) and premium content offerings

• Content Licensing & Distribution…

• Licensing film and TV content to third-party platforms, international broadcasters, and syndication partners

• Theatrical & Home Entertainment…

• Box office revenue from film releases plus digital and physical home entertainment sales

• Affiliate Fees…

• Carriage fees paid by cable, satellite, and virtual MVPD distributors for network distribution

• Consumer Products & Experiences…

• Revenue from merchandising, licensing of IP, and experiences tied to major franchises

Select Capital Markets History:

• Feb 2026: Agreed to be acquired by Paramount Skydance in a ~$110B transaction following a competitive bidding process involving Netflix and others

• Dec 2025: Entered merger agreement with Netflix for its studios and streaming assets before ultimately terminating in favor of Paramount’s superior offer

• Apr 2022: WarnerMedia merged with Discovery, Inc. to form Warner Bros. Discovery in a ~$43B transaction following AT&T spin-off

• Jun 2018: AT&T acquired Time Warner for ~$85B, forming WarnerMedia as part of its telecom-media strategy

Stock Price

NOTE: current stock price reflects increase post bid acceptance from PSKY, though deal is not yet closed.

• $27.28 as of 3/24/2026

• Down 6% MoM

• Up 154% YoY

• Traded on NASDAQ: WBD

Financials (USD)

(per company filings. FY ends Dec 31)

• FY 2025…

• Revenue: $37.3B, down 5% YoY

• Adj EBITDA: $8.7B, down 3% YoY

• Adj EBITDA Margin: 23% 

• Net Income: $727M vs Net Loss of $11.3B in prior year

Valuation (in USD)

(per stockanalysis.com as of  3/24/2026)

• Mkt Cap: $67.7B

• C&CE: $4.6B

• Total Debt: $36.8B

• Enterprise Value: $99.8B

• Enterprise Value Multiples…

• FY 2025 Revenue: 2.7x

• FY 2025 Adj EBITDA: 11.5x

–BUYER: Paramount Skydance (PSKY)–

Overview

• Combined global media company formed in 2025 through the merger of Paramount Global and Skydance Media

• Blends legacy broadcast / studio assets with a modern, franchise-driven production platform

• Key IP includes Mission: Impossible, Top Gun, Star Trek, SpongeBob SquarePants, the Yellowstone universe, and CBS primetime/sports (e.g., NFL, March Madness, Big Ten)

• Distribution across theatrical, linear TV (broadcast and cable), SVOD, and FAST

• Majority owned by the Ellison family and RedBird Capital

• ~18,000 employees

• HQ in Los Angeles

Company Highlights

• 60M+ global subscribers on Paramount+ as of 2025

• 100M+ PlutoTV monthly active users across 35+ countries

• #1 rank for CBS as most watched US broadcast network for 15+ consecutive seasons

• 200+ country and territory distribution footprint through Paramount+, PlutoTV, and third-party licensing

• Broad live sports rights portfolio including the NFL, March Madness, Champions League, and UFC

• Extensive IP library spanning Mission: Impossible, Transformers, SpongeBob SquarePants, Star Trek, and the Yellowstone universe

Founding Story

• Paramount Pictures, founded in 1912 by Adolph Zukor, is one of the original major Hollywood studios

• CBS, founded in 1927 as a radio network, grew into one of the leading U.S. broadcast television networks

• Viacom, a 1971 spin-off of CBS, acquired Paramount Communications in 1994, bringing the studio into its portfolio

• Viacom and CBS merged in 2000, split into separate companies in 2006, and re-merged in 2019 to form ViacomCBS

• Rebranded to Paramount Global in 2022 to align under a unified global streaming strategy

Business Lines / Services

• Studio & Film Production…

• Produces and distributes films through Paramount Pictures, Skydance, and affiliated production units

• Television Production…

• Develops scripted and unscripted content for internal platforms and third-party networks

• Streaming Platforms…

• Operates Paramount+ (SVOD) and Pluto TV (FAST) offering on-demand and live streaming content

• Broadcast Television…

• Owns and operates CBS, a leading U.S. broadcast network

• Cable Networks…

• Portfolio includes Nickelodeon, MTV, Comedy Central, BET, and other global cable brands

• Sports & Live Programming…

• Broadcast rights and production for live sports including NFL, NCAA, UEFA, and other major events

• Content Library & IP Portfolio…

• Owns a deep catalog of film and television IP including Mission: Impossible, Top Gun, SpongeBob, Star Trek, and Yellowstone

Business Model

• Advertising…

• Direct-sold and programmatic advertising across broadcast TV, cable networks, and Pluto TV

• Subscription Revenue…

• Monthly subscription fees from Paramount+ and premium content offerings

• Affiliate Fees…

• Carriage fees from cable, satellite, and virtual MVPD distributors for network distribution

• Content Licensing & Distribution…

• Licensing of film and TV content to third-party platforms, broadcasters, and international partners

• Theatrical & Home Entertainment…

• Box office revenue and digital/physical home entertainment sales

• Consumer Products & Experiences…

• Revenue from merchandise, licensing of IP, and franchise-based experiences

Select Capital Markets History:

• Feb 2026: Agreed to acquire Warner Bros. Discovery in a ~$110B transaction following a competitive bidding process against Netflix

• Aug 2025: Completed merger with Skydance Media to form Paramount Skydance, backed by ~$8B of equity from the Ellison family and RedBird Capital

• Jul 2024: Entered definitive agreement with Skydance Media and National Amusements to combine companies and recapitalize Paramount

• Dec 2019: CBS and Viacom recombined to form ViacomCBS, reuniting broadcast, cable, and film assets

Stock Price

• $9.17 of 3/24/2026

• Down 13% MoM

• Down 23% YoY 

• Traded on NASDAQ: PSKY

Financials (USD)

(per company filings. FY ends Dec 31)

• FY 2025…

• Revenue: $28.9B, down 1% YoY

• Adj OIBDA: $3.1B, down 1% YoY

• Adj OIBDA Margin:11%

• Net Income: -$621M

**NOTE: Adj OIBDA is a metric from WBD that excludes programming charges, impairments, restructuring, and transaction costs

**NOTE: FY 2025 financials reflect combined Predecessor (Jan–Aug) and Successor (Aug–Dec) periods due to the Skydance merger close in August 2025. Figures sourced from stockanalysis.com for consistency.

Valuation (in USD)

(per stockanalysis.com as of 3/24/2026)

• Mkt Cap: $10.3B

• C&CE: $3.3B

• Total Debt: $15.1B

• Enterprise Value: $22.2B

• Enterprise Value Multiples…

• FY 2025 Revenue: 0.8x

• FY 2025 Adj OIBDA: 7.2x
  

–DEAL DETAILS–

Sources: Paramount Press Release | SEC Form 8-K (Definitive Agreement) | SEC Form 8-K (Revised Offer) | WBD Earnings Release | Variety | CBS News

Overview

• PSKY to acquire 100% of WBD for $31 per share in cash

• Implies ~$81B equity value and ~$110B enterprise value

• Includes a $0.25 per share quarterly ticking fee (accrued daily) from Sept. 30, 2026 through closing

• Includes a $7B reverse termination fee

• Prior to PSKY agreement, WBD had agreed to sell its Streaming & Studios segment to Netflix at $27.75 per share (~$72B implied equity value), with Global Networks expected to be spun off

• PSKY also agreed to cover the $2.8B termination fee WBD owed Netflix for exiting its prior merger agreement, adding to the total cost of the transaction

Transaction Financing Overview 

• Fully financed with ~$47B in equity from the Ellison family and RedBird Capital and ~$54B in debt commitments from Bank of America, Citigroup, and Apollo — with no financing condition

• Combined company expected to carry ~$79B in net debt post-close, implying a multi-billion annual interest burden and making cost synergies and deleveraging central to the deal thesis

Equity Financing: ~$47B

• $47B of new Class B equity at $16.02 per share, fully backed by the Ellison family and RedBird

• Includes irrevocable personal guarantee from Larry Ellison of $43.3B, covering equity financing plus damages claims

• Equity commitments also cover the $1.5B debt refinancing cost (if incurred), Netflix break fee, and any incremental breakage costs.

• Existing Paramount shareholders will be offered participation in a rights offering of up to $3.25B of Class B shares at $16.02 per share

Debt Financing: $54B

• $54B of debt commitments from Bank of America, Citigroup and Apollo

• Structured as 364-day bridge commitments and $3.5 billion of revolving credit

Other Financial Backers:

• Sovereign wealth funds of Saudi Arabia, Qatar and Abu Dhabi are also involved

Valuation (in USD)

• Overview…

• Equity value: ~$81B ($31/share) — total cash paid to WBD shareholders

• Enterprise value: ~$110B — includes ~$29B in WBD net debt assumed by PSKY

• Represents a ~147% premium to WBD's undisturbed price of ~$12.54 (Sept. 10, 2025)

• Enterprise Value Multiples…

• FY 2025 Revenue ($37.3B): 2.9x

• FY 2025 Adj EBITDA ($8.7B): 12.6x

• Fully synergized 2026E EBITDA: 7.5x (per PSKY)

• Valuation Notes…

• The gap between 12.6x current EBITDA and 7.5x synergized is the core of PSKY's deal thesis

• The transaction only works at this price if the combined company delivers on $6B+ in projected cost synergies, making integration execution the single biggest risk factor

Strategic Rationale - Paramount

• Combines Paramount+, Max, and Pluto TV into the strongest scaled streaming bundle assembled to compete with Netflix

• Unifies one of the deepest IP portfolios in media, bringing Harry Potter, DC, Game of Thrones, Lord of the Rings, and Barbie together with Mission: Impossible, Top Gun, SpongeBob, Yellowstone, and Star Trek

• Adds a premium global sports portfolio across the NFL, UFC, Champions League, NCAA Basketball, NHL, Big Ten, PGA Tour, and Olympics, strengthening live content differentiation

• Gives Pluto TV premium library depth through HBO, Warner Bros., and DC content, strengthening its position against Tubi, Roku, and Peacock in FAST

• Unlocks $6B+ of projected synergies through streaming platform consolidation, ERP migration, overhead reduction, procurement savings, and real estate rationalization

• Avoids the linear spin risk embedded in the prior Netflix deal by acquiring both WBD segments rather than leaving shareholders with a standalone declining networks business

• David Zaslav (President & CEO, WBD): "Our guiding principle throughout this process has been to secure a transaction that maximizes the value of our iconic assets and our century-old studio while delivering as much certainty as possible for our investors."

• “Because of our commitment to investment and growth, our acquisition will be superior for all WBD stakeholders, as a catalyst for greater content production, greater theatrical output, and more consumer choice.” Said David Ellison, Chairman and Chief Executive Officer of Paramount.

Post-Deal Operations

• Both WBD and Paramount studios will be maintained independently

• Each studio commits to 15 feature films per year (30 combined), with minimum 45-day global theatrical window

• Streaming technology stacks to be consolidated onto a unified platform

• Both studios will continue licensing to 3rd-party platforms and remain active content buyers from independent producers / studios

• David Ellison remains Chairman & CEO of combined entity

• David Zaslav's future role not yet publicly announced

• Combined entity will operate in 200+ countries with rights portfolio spanning entertainment, sports, and news across theatrical, linear, SVOD, and FAST distribution
  

–WHAT ELSE I FIND INTERESTING–

**Special acknowledgement to our MBA Associate Sri Nimmagadda for his below analysis.

IP Consolidation Creates a Creator Content Opening on Netflix and Amazon

The most direct implication for the creator economy is one of substitution economics. When PSKY-WBD combines, it will logically prioritize filling its own streaming platforms — Paramount+, HBO Max, PlutoTV — with internally owned IP before licensing premium titles to competitors. That means less WBD and Paramount library content available on Netflix and Amazon, at any price.

Netflix and Amazon face a genuine trade-off: pay higher prices for a shrinking pool of proven third-party library content, or redirect that capital toward more cost-efficient programming alternatives. We believe this dynamic accelerates what was already a visible trend — streamers moving down-market to digital-native and creator-adjacent formats. Netflix has already partnered with Ms. Rachel and Mark Rober, licensed YouTube-native children's IP like CocoMelon, and is widely expected to experiment further with short-form creator formats. Disney is piloting AI-enabled UGC and vertical video on Disney+. These aren't experiments. They're early infrastructure for what comes next.

The key insight here: library content like Friends, Harry Potter, Criminal Minds, and Game of Thrones retains subscribers through comfort and familiarity — not because viewers are discovering something new. Creator content, particularly formats built around talent with established fandoms (MrBeast, Pokimane, Emma Chamberlain), serves exactly the same retention function at a fraction of the production cost. As proven IP becomes scarcer and more expensive, streaming services will increasingly treat top-tier creators as the next-best substitute.

For founders and operators in the creator economy, this is the clearest structural tailwind in years. The question isn't whether streamers will invest more in creator-adjacent content — they already are. The question is which platforms move fastest and which creator-side businesses are positioned to capture deal flow when they do. RockWater has been tracking this thesis closely in our 2026 Creator M&A Outlook.

PlutoTV + WBD's Library = FAST's First Real Moment

PlutoTV has spent years being described as a strategic asset that hasn't yet reached its potential. WBD's acquisition changes the equation materially. WBD contributes one of the most valuable catalog portfolios in entertainment — HBO library content (The Sopranos, The Wire, Succession, Game of Thrones), Warner Bros. films, DC IP, and a massive unscripted archive spanning HGTV, Food Network, and Investigation Discovery. Migrating select long-tail and non-core titles to PlutoTV would enable genre-specific linear channels, franchise-branded linear streams (imagine a dedicated Sopranos channel), and meaningful international FAST expansion.

The structural logic is sound: FAST operates on ad-driven revenue with meaningfully lower content costs than SVOD, and it captures CTV eyeballs from cord-nevers and subscription-fatigued households that will never pay for HBO Max. As subscription fatigue grows — and the average U.S. household has demonstrated clear limits on the number of streaming subscriptions it will maintain (current average is 4-5 services) — FAST functions as both a hedge against SVOD churn and a vehicle to capture lean-back viewing time that would otherwise go to YouTube or social video.

There's a real market gap here that PSKY-WBD is positioned to fill. Consumers currently face a choice between YouTube's UGC ecosystem, premium SVOD services, and FAST platforms with middling content. A PlutoTV stacked with premium HBO and Warner Bros. library content fills the white space — curated, recognizable IP, free, ad-supported, lean-back. Tubi has already shown what this can look like, and its "Tubi for Creators" initiative demonstrates that FAST platforms are already thinking about commissioning and licensing creator content directly. If PlutoTV follows the Tubi playbook at larger scale, FAST evolves from a passive content repository into an active buyer of creator programming.

We've covered a similar dynamic in our analysis of the TCG/Goalhanger deal and the Law&Crime/Court TV transaction — both cases where access to a distribution platform fundamentally changed the economics of creator-adjacent content businesses. The PSKY-WBD deal is that dynamic at 100x scale. Founders building IP that works in a lean-back FAST environment should be paying close attention.

The TikTok Wildcard: One Family, Three Ecosystems

The most structurally interesting element of this deal isn't in the press release. Larry Ellison's Oracle holds approximately 15% of TikTok's U.S. business — a stake negotiated as part of the resolution of TikTok's U.S. regulatory situation. The Ellison family, led by David Ellison, now controls Paramount Skydance, will soon control Warner Bros. Discovery, and has a significant (if minority) stake in TikTok through Oracle. That's short-form discovery, premium long-form content, and one of the world's largest franchise IP libraries under one ownership umbrella.

Important caveat first: a 15% minority stake does not mean operational control.

Oracle does not run TikTok, and the Ellisons do not make programming decisions at the platform. But structural alignment doesn't require operational control — it requires shared incentives and a willingness to deal. TikTok is already the most powerful IP incubation engine in the creator economy. Trends, creators, and micro-franchises achieve cultural relevance on TikTok before migrating to broader formats. Wednesday (Netflix's Wednesday Addams series) benefited enormously from TikTok organic virality. Paramount could formalize that pipeline.

The specific opportunities across the creator monetization lifecycle are concrete: (1) leverage TikTok audience demand data to inform Paramount's content investment decisions — essentially using TikTok as a predictive market research tool for what IP will travel; (2) launch micro-dramas on TikTok (short-form, serialized vertical video — a format gaining significant traction in Asian markets) to test new IP before committing to a series order; (3) distribute exclusive franchise-anchored products through TikTok Shop (Spongebob consumer products tied to a theatrical release, for example). Each of these represents a genuine monetization experiment that no legacy studio has yet executed credibly.

If executed, this would be the first credible attempt by a legacy studio to integrate creator-native discovery with premium content monetization at scale. The structural conditions exist. Whether the strategic will and operational execution follow is the open question — and in our experience advising in this space, the gap between structural alignment and executed strategy is where most deals fail to deliver on their creative promise.

I'm the founder of RockWater. We do M&A and strategy advisory for creator economy and social / audio agencies. From buy and sell-side M&A to valuation diagnostics and go-to-market planning. 

DM me on LinkedIn or email [email protected]

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