REUTERS — Warner Bros Discovery has agreed to be acquired by Paramount Skydance in a $110 billion deal, ending a high-stakes bidding war after Netflix walked away from its agreement with the HBO Max owner.

The deal, with an equity value of $81 billion, is expected to close in the third quarter of 2026, the companies said on Friday. Reuters first reported on Warner Bros Discovery and Paramount signing a deal earlier in the day, citing an audio clip of a global town hall held by the company.

The merger would create a media powerhouse, combining major studios and networks such as CNN and CBS to compete more aggressively, as streaming has upended the industry by drawing audiences away from traditional linear TV.

The combined company will boast a film library of over 15,000 titles and popular franchises such as “Game of Thrones,” “Mission Impossible,” “Harry Potter,” and the DC Universe, the companies said in a statement.

Netflix on Thursday declined to match Paramount’s latest $31-per-share offer, which Warner Bros deemed superior to the streaming pioneer’s $27.75-per-share agreement for its studio and streaming assets.

Warner Bros received the contracts from Paramount on Saturday and within the following two days on non-stop negotiation, it concluded that Paramount’s offer was superior, according to a source familiar with negotiations.

Warner Bros did not immediately respond to a Reuters request for comment.

Shares of Paramount were up around 3 percent in extended trading, while those of Netflix were down 1%.

Warner Bros shareholders are expected to vote on the proposed merger in early spring of 2026, the companies said.

The acquisition will be funded by $47 billion in equity from the Ellison Family and RedBird Capital Partners, with additional debt commitments of $54 billion from Bank of America, Citigroup and Apollo. Paramount also plans a rights offering of up to $3.25 billion of Class B stock for existing shareholders.

Paramount and Warner Bros said they expect more than $6 billion in savings, driven by technology integration, corporate efficiencies and streamlining operations.

While Paramount has won the bidding war for Warner Bros Discovery, the merger has drawn scrutiny. California regulators are preparing a vigorous review of the $110 billion deal, which could reshape Hollywood.

Paramount, led by billionaire Larry Ellison’s son David Ellison, has deep political connections to the Trump administration, which could help it to get more favorable treatment, some analysts have said.

California State Attorney General Rob Bonta said on Thursday that California is already investigating the deal and will be “vigorous” in its review.

Paramount has been in pursuit of Warner Bros since late last year when it launched a hostile campaign to wrest the company from the streaming giant by consistently raising its offer.

The company, led by billionaire Larry Ellison’s son David Ellison, enticed Warner’s board back to the bargaining table by raising the possibility of an improved cash offer.

In its revised bid, Paramount raised the termination fee it would pay should the deal fail to gain regulatory approval to $7 billion from $5.8 billion.

Paramount paid the $2.80 billion termination fee that Warner Bros owed Netflix, the streaming giant said in a regulatory filing on Friday.

“Netflix is the biggest winner in the Warner Bros Discovery sweepstakes. Netflix earns a termination fee paid by Paramount. By driving a bidding war, Netflix raised the price Paramount had to pay, which will ultimately burden Paramount-WBD with more debt,” Emarketer analyst Ross Benes said.

‘EU antitrust approval likely not a hurdle’

Paramount is expected to easily win European Union antitrust approval, with any required divestments likely to be minor, Reuters reported on Friday, citing sources.

The deal is among Hollywood’s biggest media shake-ups and will create one of the largest film studios in the world, allowing Paramount to tap Warner’s trove of intellectual property, including franchises such as “Fantastic Beasts” and “The Matrix.”

The new company has pledged to maintain both studios and produce a minimum of 30 theatrical films annually.

Lawmakers on both sides of the political aisle have, however, raised concerns that any deal to acquire Warner Bros could result in fewer choices and higher prices for consumers.

Cinema operators are also concerned that combining large Hollywood studios could cost jobs and reduce the number of movies released in theaters.

“The loss of competition would be a disaster for writers, consumers and the entire entertainment industry. This merger must be blocked,” the Writers Guild of America, a union representing thousands of television and film writers along with other media workers, said in a statement.

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