MW Paramount says Warner Bros. acquisition would be an 'accelerant' of its turnaround strategy
By Lukas I. Alpert
Paramount saw losses rise in its latest quarter, while revenue and streaming subscribers grew in the first full reporting period since its merger with Skydance
Paramount says a potential takeover of rival Warner Bros. Discovery would help speed up the turnaround of its business.
Paramount Skydance's new management team said Wednesday that while their turnaround plan is proceeding apace, a potential acquisition of Warner Bros. Discovery would be an "accelerant" for transforming their business.
Paramount's $(PSKY)$ new CEO, David Ellison, who led a takeover of the media conglomerate last fall and quickly turned his sights on acquiring the much larger Warner Bros. Discovery $(WBD)$, said he sees both moves as part of a greater effort to build the media company of the future.
"While we are confident in our standalone strategy and growth trajectory for Paramount, we view WBD as an accelerant to achieving these goals more quickly, in a way that is economically compelling for Paramount shareholders," Ellison wrote in a letter to shareholders.
His comments came as part of Paramount's fourth-quarter earnings presentation and followed the company's 11th-hour comeback as the potential front-runner in the race to acquire Warner Bros.' famed studio, its HBO Max streaming business, and television assets including channels like CNN, Discovery and the Cartoon Network.
On Tuesday, WBD said that a new $31-per-share bid from Paramount could ultimately be deemed superior to an already accepted offer from Netflix $(NFLX)$.
The last-minute offer from Paramount on Monday added a wild twist to a dramatic bidding process that had seemed firmly in Netflix's hands.
In the meantime, Paramount has been pushing forward with its own effort to reposition its business since Ellison and his investors - including his father, Oracle $(ORCL)$ co-founder Larry Ellison - closed an $8 billion deal to take over the company in August.
In its first full quarter under new management, Paramount reported growing losses but said that it had gained ground on revenue and in the number of subscribers to its streaming service, Paramount+.
Shares of Paramount were rising 0.6% in after-hours trading Wednesday, after closing the day's regular session down 2.2%.
In the fourth quarter, Paramount said it had recorded a net loss of $573 million - more than double the $224 million loss it reported in the same quarter last year, and well below analysts' expectations of a modest profit of $20 million, according to FactSet.
That resulted in a loss of 52 cents per share, below analysts' expectations of a loss of one cent.
Meanwhile, the company reported revenue of $8.15 billion for the quarter, in line with expectations and up from $7.98 billion in the same quarter last year.
Paramount said much of those gains could be attributed to increases in licensing and subscription revenue, which were offset by declines in theatrical, advertising and affiliate revenue.
The company said it was sticking with its previously stated revenue guidance of $30 billion for the year.
The company's streaming division also added 1 million subscribers from the prior quarter, bringing it to a total of 78.9 million paying customers at the end of the fourth quarter. Paramount said it expected to see softer subscriber growth in the coming quarters as it works to drop a group of bundled subscriptions - just below 2% of its total - that were unprofitable.
Ellison noted that the company was in the midst of ramping up spending by $1.5 billion to build out its theatrical and television content slates.
"We're really pleased about the investments we are making," the CEO said in a call with analysts. "We inherited a slate that has underperformed and we are going to see a significant improvement in the profitability in our film slate this year."
For now, the WBD board said it was continuing to recommend the deal reached with Netflix but that ongoing negotiations with Paramount "could reasonably be expected to lead to a 'company superior proposal.'"
If WBD decides the Paramount bid is ultimately better, Netflix will have four days to decide whether it wants to sweeten its proposal or walk away.
In addition to a $1-per-share increase from its previous offer of $30 a share, Paramount offered to pay a $7 billion regulatory termination fee if the merger does not clear regulatory hurdles and a $2.8 billion termination fee it would be required to pay Netflix.
Paramount also offered to pay a 25-cents-a-share "ticking fee" for every quarter the deal doesn't close after Sept. 30 of this year.
The significantly sweetened bid from Paramount puts considerable pressure on WBD to change tack midstream - and on Netflix to either raise its bid of $27.75 per share for Warner Bros.'s studio and streaming business or drop out of the bidding.
Analysts had said that Paramount's best chance of wresting WBD from Netflix would be to considerably raise its existing $30-a-share bid, making it difficult for a typically "disciplined" Netflix to forge ahead with what, for the streaming giant, is a "nice to have" asset but not a "must have" one.
-Lukas I. Alpert
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February 25, 2026 18:22 ET (23:22 GMT)
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