Netflix Walks With A Cool $2.8 Billion Breakup Fee: Who Gets What In Paramount Merger Proposal

Core Viewpoint - Warner Bros. Discovery (WBD) has accepted a superior offer from Paramount, rejecting Netflix's previous deal, which indicates a significant shift in the competitive landscape of media mergers and acquisitions [1][12]. Group 1: Offer Details - Paramount's new offer includes acquiring WBD for $31 per share in cash, up from a previous offer of $30 per share, reflecting a total equity value of $78 billion and an enterprise value of $108 billion, including net debt [3]. - A daily "ticking fee" of $0.25 per quarter will accrue to WBD shareholders after September 30, 2026, until the deal is finalized, which is an increase from the previous proposal that started accruing later [4]. - Paramount has increased the regulatory termination fee to $7 billion, up from $5.8 billion, in case the transaction does not close due to regulatory issues [5]. Group 2: Financial Commitments - The Ellison Trust is providing a $45.7 billion equity commitment, with Larry Ellison guaranteeing this commitment, including additional equity funding if necessary [7]. - Previous offers included a $43.6 billion equity commitment and $54 billion in debt commitments from major banks [8]. Group 3: Debt Implications - WBD ended 2025 with $33.5 billion in debt, and the Paramount deal could add another $57.7 billion in debt, resulting in a total debt burden exceeding $90 billion, marking it as the largest leveraged buyout in history [9]. Group 4: Cost Savings and Workforce Impact - Paramount has projected $6 billion in cost savings from the merger, which may lead to layoffs, contrasting with Netflix's approach that emphasized workforce preservation [10]. Group 5: Market Position and Future Outlook - Analysts suggest that the merger could transform two smaller media companies into a more significant industry player, provided management can maintain financial flexibility [12].