Latest On Paramount Acquiring Warner Bros. Discovery, What It May Mean For AEW

Paramount turned its fortunes around in the Warner Bros. Discovery bidding battle, and a new report lays out what the acquisition may mean for AEW. As noted, Paramount won the company in its bidding war with Netflix when the streaming company chose to back out rather than match Paramount’s new offer of $31 a share. The win caps off several months of back and forth in which Netflix initially announced a deal to acquire WBD. Paramount launched a hostile bid that eventually led to WBD agreeing (with Netflix’s consent) to reopen negotiations with Paramount, who put in the new bid that won the company.

It’s been a busy 24 hours since and as Deadline notes, Paramount and WBD unveiled the details of the new deal on Friday. The price for the merger is $110 billion and will see the two companies merge. Paramount’s deal is for all of the company, including the Discovery Global networks which would have been spun off under the Netflix deal. Paramount has committed to keeping Paramount Pictures and Warner Bros. Pictures as separately operated studios, with each delivering 15 films a year. Those films will receive full theatrical releases with a minimum 45-day window globally in theaters along with current industry standard home video window before they become availability on SVOD (subscription services).

In addition, Paramount has paid Netflix the $2.8 billion breakup fee that Warner Bros. Discovery owed for ending the deal with the streamer. The merger is expected to close in the third quarter of this year, subject to regulatory clearances and as well as approval by WBD shareholders. The latter vote is expected in the early spring.

The deal is being funded by $47 billion in equity, which is fully backed by the Ellison Family as well as RedBird Capital Partners and may include “other strategic and financial partners.” It features another $54 billion of debt commitment from Bank of America, Citigroup, and Apollo. The deal is putting Paramount massively in debt; the company’s debt ratio will be seven times its annual earnings. Paramount has committed to cut that ratio down to 4.4 times its earnings, which means that they must find heavy cuts in the combined company.

What It Means To AEW

The big question for wrestling fans is what this new deal means for AEW. Had WBD been acquired by Netflix, AEW’s TV rights deal would have gone with Discovery Global Networks while its streaming rights would have gone to Netflix, who would have acquired HBO Max. Instead, Paramount is taking on all of WBD which means that AEW’s deal will under Paramount/WBD’s purview. There’s a benefit from that in that AEW’s rights are not split, and there is no concern about HBO Max potentially being folded into Netflix. WWE is of course a broadcast partner with Netflix, so it’s not clear what such a situation (which never became more than theoretical as HBO Max & Netflix merging was never broached) would have shaken out.

That said, as the WON notes, there are some potential issues with Paramount — largely in regard to how the debt may be cut. Paramount will need to cut back in a lot of areas, and that includes both jobs and expenditures. This does not mean that AEW is necessarily in trouble; for one, AEW’s TV deal runs through 2027, with an option to extend the deal through 2028. So as of now, AEW’s TV deal will continue unabated.

The biggest question is how Paramount will view AEW from a cost to value ratio. For example, Paramount has a deal to air the UFC on Paramount+. The UFC is a much larger entity than AEW, but Paramount is also paying much more at $7.7 billion over five years. So while AEW may not bring in the same money as a UFC, it also costs much less to the company. Live entertainment remains a premium for networks and streamers because it is a higher driver of audience than similarly-leveled non-live entertainment.

Under the new deal, TNT Sports and CBS Sports are expected to combine. That would include the NFL, College Football Playoff games, March Madness, the MLB and NHL playoffs, and more. Paramount does not have any pro wrestling so AEW would in theory fill that hole — but obviously, it depends on how those in charge of the new company views wrestling in terms of value.

It’s also not currently known whether Paramount+ and HBO Max will be combined. Paramount and WBD’s announcement suggests that they will not but does not state so definitively. Should the companies remain separate, AEW provides greater value as a component of HBO Max, and one where the parent company earns a cut of AEW’s PPV sales on the platform. As previously noted, WBD owns a stake of less than 10% in AEW as well.

The TL;DR of this is that there is a lot in flux in what has been a chaotic time for Warner Bros. Discovery. For the time being (and perhaps at least until the end of AEW’s deal with WBD), nothing is expected to change for AEW. What happens after 2027 is too early to say.