Potential Bidders Emerge for Warner Bros. Discovery
Interest in Warner Bros. Discovery (WBD) is heating up, with reports suggesting that cable giant Comcast may throw its hat into the ring for a potential bid, as highlighted by On the Money.
Initial reports indicated that David Ellison, head of Paramount Skydance, is actively negotiating with private equity firms like Apollo Global Management to join a bid that could exceed $60 billion for WBD.
However, there’s some uncertainty regarding whether Ellison’s father, who is the world’s second-richest individual, will be willing to further invest in media acquisitions following his previous $8 billion deal with Paramount.
Insiders close to Paramount Skydance express concern that Comcast could soon emerge as a significant contender for WBD. Current plans indicate that Comcast is in the process of spinning off its cable TV division into a new entity called Versant.
When this spinoff concludes, Comcast will focus on its services such as the Peacock streaming platform, Universal theme parks, NBC News, and Xfinity, which handles cable and internet services.
Skydance is particularly wary of a Comcast acquisition due to CEO David Zaslav’s existing strategic partnership with Comcast’s Xfinity for content distribution. It’s still unclear which of Comcast’s divisions might make a bid, but insiders suggest that the company’s president, Brian Roberts, has a notable interest in WBD’s content, especially its studio and HBO Max, which ranks as a top streaming service.
It’s reported that Skydance’s team believes Comcast is the most likely bidder. A spokesperson from Comcast has refrained from commenting, as has Skydance.
Recently, WBD, which owns major assets like HBO and CNN, has sought guidance from Goldman Sachs to gauge the value of such a deal, which Ellison hinted could be an all-cash offer. Other interested parties include Netflix and Amazon, according to sources.
Nonetheless, questions linger about whether David Ellison will follow through on his intention to make a substantial cash bid for WBD. People close to him indicate that they cannot fully depend on Larry Ellison, as he seems hesitant to finance the deal independently.
Investor Mario Gabelli pointed out that David Ellison may need to partner with others to facilitate the transactions. Gabelli, who holds shares in both Paramount and WBD, notes that WBD has a significant amount of debt—around $30 billion—and that acquiring it might come with a price tag exceeding $60 billion.
Potential investors that could be involved in a deal with WBD include Apollo, which previously offered $26 billion to Paramount but lost out to Skydance.
Apollo, helmed by billionaire Mark Rowan, owns a variety of television stations through Cox Media Group and has a stake in Legendary Entertainment, a company that collaborates with Warner Bros. on popular films like “Dune” and “Godzilla.” Recently, Paramount signed a multi-year deal with Legendary to distribute some of its films in theaters.
Apollo seems to be one of the closer players to supporting Ellison’s bid, though Blackstone, led by Stephen Schwarzman, is currently exploring funding options but isn’t inclined to participate at this moment.
To complicate the situation, Zaslav is restructuring WBD, splitting it into two divisions: one focusing on streaming and studios, and the other on cable properties. He has reportedly set a price of over $30 per share for the streaming and studio units, which differs significantly from the $22-$24 per share range that the Ellisons are discussing, despite highlighting WBD’s recent successes at the box office and the profitability of HBO Max.
