Paramount or bust for Warner Bros Discovery
After months of rebuffed advances, Paramount has finally forced Warner Bros Discovery’s hand.
Having swatted away at least three friendly approaches from Paramount’s billionaire owner David Ellison, WBD’s board has now hung the “for sale” sign on the lot.
The latest offer — about $23.50 a share — has forced other potential bidders to consider making a move. Netflix, Amazon and Comcast have all expressed “interest”, people familiar with the matter told DD, but mostly in bits and pieces.
Netflix would love HBO as it’s the only brand that could cement its status as the world’s number-one streamer. But it has zero appetite for CNN or the rest of Warner’s linear baggage. Buying the whole company just to spin off the parts would trigger a monster tax bill and a regulatory migraine.
Then there’s Amazon, which faces the same dilemma plus a Federal Trade Commission that’s already on its case. Jeff Bezos is likely to be spared some of the regulatory hurdles given he’s become more Maga friendly but it would be hard to justify, according to competition experts.
Comcast looks like a long shot too. Its chief executive Brian Roberts isn’t exactly on friendly terms with the current administration, and few big media deals get through Washington these days without at least a wink from the White House. Plus Comcast is going through its own split so the timing for a deal may be sub-optimal.
That leaves Paramount. It’s the only bidder that can credibly buy all of WBD and make the economics work. HBO and the Warner studio fit neatly with Paramount’s film and streaming assets (and Paramount Plus desperately needs more content).
The linear overlap offers fat cost-cutting potential. Obviously, regulators might not love a combined CNN-CBS, but that could all change if Bari Weiss is in charge of both.
Paramount also comes with useful friends: Ellison’s father Larry is one of the richest men in America and a close ally of President Donald Trump. Plus he’s flanked by Gerry Cardinale’s RedBird Capital, which knows how to structure a media deal.
WBD chief David Zaslav may be sitting pretty in the hot seat, but may have to play nice.
WBD’s board appears ready to play ball, especially given that Paramount’s interest has helped lift its stock 100 per cent since the start of the year. It’s hard to believe that WBD shareholders won’t launch a rebellion if the board just walks away.