Paramount Global’s Strategic Ascent: The Skydance Merger and Warner Bros. Discovery Acquisition

The Skydance Merger: Laying the Foundation

The foundation of Paramount’s 2026 dominance was established in August 2025 with the completion of its long-anticipated merger with Skydance Media, valued at $8 billion [4]. The transaction formally created “Paramount Skydance Corporation” (NASDAQ: PSKY), an entity with an estimated enterprise value of $28 billion. This merger resolved years of internal corporate turbulence, placing the conglomerate under the firm control of technology heir David Ellison [5].

Ellison’s leadership immediately injected a technology-forward strategy into the legacy media company, preparing it to optimize its direct-to-consumer assets—including Paramount+ and Pluto TV—alongside its legendary studio operations, CBS broadcast networks, and MTV entertainment channels [4].

In late February 2026, Paramount Skydance released its Q4 2025 earnings, reporting forward guidance projecting total revenue of $30 billion for 2026 (representing 4% year-over-year growth) and Adjusted EBITDA of $3.8 billion, with the DTC segment acting as the primary growth engine [3]. The stock price surged over 10% on the day of the announcement, providing the financial momentum for the next stage of consolidation [6].

The Warner Bros. Discovery Counter-Offensive

Empowered by the successful Skydance integration and backed by $57.5 billion in committed debt financing from Bank of America, Citigroup, and Apollo Global Management, Paramount launched an audacious counter-bid for Warner Bros. Discovery [2]. WBD possesses highly coveted assets including HBO, CNN, and the Warner Bros. film studio—properties that initially attracted a merger agreement with Netflix in late 2025 [5].

Paramount initiated a relentless multi-pronged counter-offensive, leveraging political lobbying in Washington, proxy fight threats, and financially superior engineering to systematically dismantle the existing Netflix agreement [2]. The result was a proposal that the WBD Board of Directors, under their fiduciary duty, was legally compelled to classify as a “Company Superior Proposal” [1].

Netflix’s Strategic Retreat

Confronted with these overwhelming financial terms, Netflix declined to exercise its four-day matching right. In a public statement, Netflix characterized the WBD transaction as a “nice to have” rather than a “must have,” citing strict financial discipline to avoid over-leveraging its balance sheet [5].

Netflix’s retreat is strategically significant. It signals that even the world’s largest streaming platform acknowledges the financial risk of debt-funded mega-mergers in the current high-interest-rate environment. Netflix’s withdrawal effectively cleared the path for Paramount to absorb WBD, creating an unprecedented constellation of media properties [5].

The combined entity will control HBO, CNN, Warner Bros. Studios, Paramount Pictures, CBS, Showtime, MTV, Comedy Central, Paramount+, Pluto TV, and the Discovery portfolio of channels—positioning it as the most diversified media conglomerate since the breakup of the original WarnerMedia-AT&T combination.

Regulatory Outlook and EU Clearance

Despite the massive scale of the proposed combination, regulatory hurdles appear manageable. Antitrust concerns in the European Union are projected to be minor because the combined entity holds less than 20% market share across all individual European broadcast and streaming territories [8]. EU regulators noted that the transaction poses fewer structural monopoly issues than a Netflix-WBD merger, which would have consolidated a dominant share of global streaming distribution [8].

The primary regulatory friction stems from the EU’s Foreign Subsidies Regulation (FSR). Paramount’s bid is partially bankrolled by sovereign wealth entities including Saudi Arabia’s Public Investment Fund, Abu Dhabi’s L’imad Holding Company, and the Qatar Investment Authority [8]. The FSR specifically targets foreign state aid that could distort the European internal market. To secure swift approval, Paramount has proactively signaled willingness to divest minor overlapping assets such as specific children’s television channels and redundant localized TV networks [8].