David Ellison, the CEO of Paramount Skydance, is getting ready to make a formal takeover bid for Warner Bros. Discovery (WBD). Interestingly, the potential for a competing offer from Comcast is providing him with some reassurance, according to On the Money.
While speculation about rival bids has centered around Netflix and Amazon, Comcast’s interest in WBD is a significant concern for Ellison and his team at Paramount Skydance.
If a bidding competition does occur, it could potentially raise WBD’s valuation from around $50 billion to even over $60 billion, which seems appealing to Ellison, considering the strategic leadership of WBD’s CEO, David Zaslav.
A source familiar with the situation expressed, “Comcast remains the biggest concern.”
Brian Roberts’ Comcast could emerge as a serious challenger, even as the company looks to divest assets like CNBC and MSNBC into a new publicly traded entity called Versant, while still retaining control of NBC and Universal Studios.
Comcast’s financial strength is notable as well, boasting about $10 billion in liquidity, compared to Paramount Skydance’s nearly $2 billion cash position.
In the event of a bidding war, Ellison might have a leg up due to his family connections. His father, Larry Ellison, co-founded Oracle and ranks as the second-richest person globally. Additionally, Larry Ellison’s friendship with former President Trump raises possibilities of scrutiny from Trump’s regulatory agencies like the Justice Department and the FCC.
Moreover, Trump has a rather unfavorable view of Roberts’ media outlets, particularly MSNBC, which is often criticized as left-leaning. A media executive remarked, “Brian Roberts is going to have to really kiss Trump’s ass to get this thing through.”
Neither Comcast nor Paramount Skydance had any comments on the situation, and Zaslav’s representatives also remained silent.
Ellison, who has been quiet since reports surfaced last month about a potential bid for WBD, is expected to unveil an offer soon. Some insiders suggest an announcement might happen this week.
However, the situation is still developing, and bids might be postponed or not submitted at all, according to these sources.
On Wednesday, Wells Fargo analysts published a report predicting that Ellison’s bid might outpace the $20-per-share offer already on the table, indicating it could become more aggressive.
“The independent directors will consider this proposal and the unaffected price,” the report noted. It also mentioned that a ‘go-shop’ period may allow WBD to explore other bids from interested companies.
Zaslav believes that if the studio and streaming divisions are separated from WBD’s cable assets, the overall value could reach $30 per share. This split is anticipated in May, and he thinks a full-blown bidding war will kick off around then, involving competitors like Netflix, Amazon, Apple, and Comcast.
So far, Zaslav has the support of the WBD board to strategize for the long haul, but that could shift depending on the financial maneuvers of David Ellison. Those close to Ellison have indicated that he wants to approach any potential deal carefully to avoid overpaying.
As previously reported, Ellison is expected to act soon, potentially leveraging both family funds and backing from private equity firms such as Apollo to bolster his bid.
