$110 billion reshape the streaming media landscape: Paramount (PSKY.US) swallows Warner Bros., integrates Paramount+ and HBO Max to take on Netflix.

Paramount (PSKY.US) announced on Monday that after completing the acquisition of Warner Bros. Discovery (WBD.US) for $110 billion, it plans to integrate its Paramount+ and HBO Max streaming services into a single platform. The company further disclosed that the acquisition deal, officially signed on February 27, is expected to be completed in the third quarter of this year. CEO Ellison stated in an investor conference call on Monday that the company currently has no plans to cut production and stressed that this deal "benefits market competition, consumer rights, and the development of creative communities." He further revealed Paramount's strategic goal: each studio under its umbrella will produce 15 theatrical films annually, with a total output of at least 30 films per year. "This is not just a simple resource integration, but a fundamental reshaping of our business model," Ellison emphasized. As of Monday's close, Paramount's stock price fell by 1.26% to $13.34. Paramount CFO Dennis Scanlon disclosed during the conference call that the company expects revenue to reach $69 billion and pre-tax EBITDA to reach $18 billion by 2026. The net debt scale after the merger is expected to be controlled at $79 billion. Regarding the integration of streaming services, Ellison emphasized that while Paramount+ and HBO Max platforms will be merged into a single service, the HBO brand will be retained. He pointed out, "The two platforms currently have over 200 million direct-to-consumer subscribers in over 100 countries and regions worldwide, which allows us to effectively compete with top streaming service providers in the current market." In terms of sports content, Ellison highlighted the strategic value of the company's sports assets post-merger, including the broadcast rights to top events such as the NFL, UFC, NCAA's "March Madness" basketball tournament, PGA tour, and the European Olympics. He specifically mentioned that the $7.7 billion long-term agreement Paramount reached with UFC last summer allows the company to have flexible broadcast rights on TNT, a Warner Bros. network, further strengthening the synergies in the sports content ecosystem. Ellison revealed that there are no plans to divest cable television networks after the merger. If Warner Bros. sells its streaming and production businesses to Netflix, Warner Bros. was supposed to divest the cable TV networks into an independent company named Discovery Global. Comcast Corporation recently completed a similar divestiture, splitting off some cable TV networks into a new company called Versant Media Group Inc. Previously, Paramount CEO David Ellison, after months of effort, set his sights on acquiring Hollywood's famous Warner Bros. Discovery and its affiliated assets (including HBO, CNN, and TNT). Amidst fierce bidding wars with Netflix, Paramount ultimately emerged victorious and reached an agreement to acquire Warner Bros. Discovery for $31 per share in cash. To win this deal, Paramount gradually increased its bid throughout the bidding process, with the initial bid of $19 per share proposed in September last year. According to the agreement, Paramount paid $2.8 billion in bid termination fees to Netflix and agreed to pay $7 billion in reverse termination fees to Warner Bros. if the deal was blocked due to regulatory approval. Regarding the timeline for advancing the transaction, Paramount COO Andy Gordon revealed during the conference call that a shareholder meeting is expected to be held in the spring for a vote on the deal. To mitigate potential delays, the agreement specifically set up a "timing fee" mechanism: if the transaction is not completed by September 30, Paramount will pay Warner Bros. shareholders a quarterly delay compensation of $0.25 per share. On the financing structure, Paramount disclosed detailed funding arrangements: $47 billion in equity financing backed by the Ellison family and Red Bird Capital Group is ready, with Ellison and his partners subscribing to new Paramount shares at $16.02 per share. Existing Paramount investors will have the right to participate in the share offering, with an expected additional fundraising of up to $3.25 billion. In terms of debt financing, the company plans to obtain a $54 billion syndicated loan from a consortium consisting of Bank of America Corp, Citigroup, and Apollo Global Management Inc. "This is a milestone moment for both companies," Ellison emphasized in conclusion. "By integrating our iconic studios, global complementary streaming platforms, cable television, and linear network assets, as well as a world-class IP library, we will together shape a new landscape for the future of the media and entertainment industry, creating a truly next-generation media entertainment giant."