A massive entertainment merger announced this week will create a media powerhouse carrying approximately $79 billion in debt, company executives revealed Monday following the completion of their $110 billion acquisition deal.
Paramount CEO David Ellison disclosed the debt figure during an analyst conference call after finalizing the $31-per-share purchase of Warner Bros on Friday. The deal came together after Netflix chose not to increase its competing bid.
The newly combined companies plan to merge their streaming platforms into one service, according to Ellison, who believes this will provide the necessary resources and scale to better challenge Netflix’s market dominance.
Ellison noted that the merged companies currently reach over 200 million subscribers across more than 100 global markets.
“Unlike Netflix, Paramount’s business could use a shot in the arm and an immediate boost to achieve the greater scale it needs,” commented Matthew Dolgin, a senior analyst with Morningstar.
The acquisition brings together Paramount’s television networks CBS, MTV, Comedy Central and BET with Warner’s portfolio including CNN, HBO, TNT, and Food Network.
This combination creates one of entertainment’s most extensive collections of proven content, joining popular franchises like “Game of Thrones,” “Mission Impossible,” “Harry Potter,” “Top Gun,” DC Universe properties and “SpongeBob SquarePants.”
The bidding war for Warner Bros stretched across several months, with both Paramount and Netflix submitting competing offers for the studio and streaming operations.
Netflix initially secured an agreement in December to purchase those assets for $27.75 per share, totaling $82.7 billion, but excluded cable networks from the deal.
When Warner’s board determined Paramount’s proposal was superior, Netflix declined to increase its offer and withdrew from the competitive battle for properties including DC Comics, HBO and HBO Max.
The Paramount-Warner arrangement eliminates uncertainty about cable network assets that Warner stockholders would have kept under Netflix’s proposal, addressing concerns that had complicated Netflix’s bid.
The merged company plans to release at least 30 movies annually in theaters while keeping both Warner Bros and Paramount studio operations running.
Paramount covered the $2.8 billion termination fee Warner owed to Netflix on Friday. Company officials expect the transaction to finalize during the third quarter of this year.
Industry observers anticipate the merger will receive European Union antitrust clearance without major obstacles, with any required asset sales expected to be minimal, according to sources familiar with the regulatory process.
Paramount, under David Ellison’s leadership – son of tech billionaire Larry Ellison – maintains connections to the Trump administration that some analysts suggest could lead to more favorable regulatory review.
However, California State Attorney General Rob Bonta has announced his office is already examining the deal and will conduct a thorough investigation.
Movie theater operators have expressed concerns that combining two major Hollywood studios could eliminate jobs and reduce the total number of films available for theatrical release.
