Paramount has its eyes on Warner Bros. — but the big question is how to pay for it

Paramount Global, backed by David and Larry Ellison, is reportedly seeking private-equity financing from firms like Apollo and Blackstone for a potential $54-$60 billion acquisition of Warner Bros. Discovery (WBD), with a reported offer range of $22-$24 per share. This pursuit of external capital, signaling challenges for the Ellisons' previously rumored all-cash bid, led to declines in both Paramount and WBD shares, reversing earlier gains. Analysts, including Ric Prentiss of Raymond James, highlight the significant debt of both companies and anticipate a longer timeline for any deal, particularly as Paramount aims to acquire WBD's full portfolio before its planned 2026 spin-off to mitigate tax implications, while Netflix has publicly downplayed interest in large media mergers.

Analysis

Paramount Global (PARA), backed by the Ellison family, is reportedly seeking private-equity financing from firms like Apollo (APO) and Blackstone (BX) for a potential $54-$60 billion acquisition of Warner Bros. Discovery (WBD). This shift from earlier all-cash bid rumors has generated "moderately negative" sentiment, causing both PARA and WBD shares to fall after previously reaching multi-year highs. The reported offer range for WBD is $22-$24 per share, representing a 24%-35% premium.

Raymond James analyst Ric Prentiss highlights significant financing hurdles, noting the Ellisons' cash limitations and the substantial existing debt of both PARA and WBD. This reliance on external capital is expected to prolong the deal timeline, contributing to the "uncertain" market tone and contrasting with initial expectations for a swift resolution.

Paramount's strategy reportedly aims to acquire WBD's entire portfolio, including its legacy cable business, *before* WBD's planned mid-2026 spin-off, likely to mitigate considerable tax implications. While WBD CEO David Zaslav reportedly seeks a bidding war, Netflix (NFLX) co-CEO Greg Peters has publicly expressed skepticism regarding large media mergers, potentially limiting competitive pressure from that quarter.

Key Decisions for Investors

• Monitor the progress of Paramount's private-equity financing efforts for the WBD acquisition, as securing capital is a critical determinant of deal viability and timeline.
• Assess WBD's risk/reward profile, weighing the potential upside from a successful acquisition at the reported premium against the downside if financing fails or the deal collapses, especially given the "moderately negative" sentiment.
• Evaluate the potential impact of increased leverage on Paramount's long-term financial health, considering analyst concerns about both companies' existing debt levels if the acquisition proceeds.
• Watch for any credible competing bids for WBD and the progress of WBD's planned legacy cable business spin-off, as these factors could significantly alter the acquisition landscape and valuation.