Paramount completes Warner Bros takeover to form Skydance
Warner Bros Discovery shareholders were paid cash, and a filing shows David Zaslav left the company on the day the deal closed.
Paramount has completed its takeover of Warner Bros Discovery (WBD), creating a combined company called Skydance that brings together two film studios, HBO, CBS and CNN.
The deal closed on 6 October. Skydance Corporation, the new name of Paramount Skydance Corporation, said in a statement that it had received unanimous approval from competition authorities covering nearly 70 jurisdictions.
“Today is a historic day, not just for Skydance but for our entire industry,” said David Ellison, the company’s chairman and chief executive.
WBD shareholders received about $31.02 in cash per share, and the stock has stopped trading on Nasdaq, according to WBD’s filing with the US Securities and Exchange Commission. The filing puts the aggregate consideration at about $78bn, funded by a mix of equity and debt.
The transaction included $47bn of new equity investment, the Skydance statement said, led by the Ellison family, RedBird, the Public Investment Fund, L’IMAD, the Qatar Investment Authority and LionTree. The Ellison family and RedBird together hold all of the Class A common stock, including 100% of the combined company’s voting shares.
The company’s streaming products will “unify into a single service over time”, but the statement gave no timetable and did not mention subscription prices.
The company says it has at least 200 million streaming subscribers across platforms and more than 180 television shows. It is committed to at least 30 theatrical films a year, each with a minimum 45-day theatrical window.
The company has nearly $70bn in revenue, it said, and is targeting at least $6bn in what it calls run-rate synergies within three years. Those savings will come mainly from technology, integration and procurement, marketing and real estate. It aims to bring net leverage down to 3.0 times by the end of 2029.
David Zaslav ceased to be a WBD director and officer at the closing and left the company’s employment the same day, the filing shows. The filing lists 13 directors who left the board, Zaslav among them, and says three other officers, Gunnar Wiedenfels, Priya Aiyar and Bruce L. Campbell, will leave on 16 October.
What happened before
Paramount’s own filing shows it paid Netflix a $2.8bn termination fee after an earlier merger agreement between WBD and the streaming company was terminated.
The Guardian reported that California, New York and 10 other states sued Paramount over concerns the merger would “extinguish” competition, before a settlement announced on 21 September that requires at least 30 films a year and independent editorial boards at the two news networks.
“This settlement is not a vote of support for this merger,” Rob Bonta, the California attorney general, said when the settlement was announced.