Warner Bros. Discovery Initiates Auction Process
Warner Bros. Discovery has embarked on a formal auction process, engaging bankers from JPMorgan and Allen & Company to assess interest from prospective buyers, including Paramount Skydance, according to reports.
On Thursday, HBO and CNN, subsidiaries of Warner Bros. Studios, convened a board meeting alongside bank representatives to discuss the auction details. Interested buyers have been given the necessary confidentiality agreements to review Warner Bros. Discovery’s financials.
A key focus for Warner Bros. Discovery is navigating the competitive interest from Paramount Skydance, which is headlined by CEO David Ellison, as indicated by inside sources.
Ellison, the son of Oracle’s co-founder, has recently intensified pressure on Warner Bros. Discovery’s CEO, David Zaslav, making three separate bids for the company. The most recent offer reached $56 billion for shares priced at $23.50.
In response, Zaslav has turned down each proposal, anticipating a bidding war that might push the share price significantly beyond $25. There’s speculation that a new offer from Ellison could be on the table soon, perhaps in a more aggressive format.
Interestingly, insiders suggest that Ellison is unlikely to exceed a bid of $25 per share, guided by his advisers who believe he has solid reasons for caution.
There’s a notable belief that Ellison’s strategy hinges on the support of former President Trump, expecting that regulatory challenges and personal biases against other bidders—like Netflix, Amazon, and Comcast—will work in his favor.
A Comcast representative declined to comment, but sources close to CEO Brian Roberts indicated that Trump might lend approval to a deal if Comcast were to spin off its cable entities, including MSNBC and CNBC.
However, Ellison’s advisors are skeptical about Trump granting Comcast ownership of networks perceived as anti-Trump. Meanwhile, Netflix and Amazon are grappling with their own antitrust concerns.
Responses from Warner Bros. Discovery and Paramount Skydance were not disclosed.
Zaslav, a well-known figure in the media landscape, is believed to be contemplating a sell-off, viewing it as a fitting conclusion to a profitable three years since the merger of Discovery and Warner Media, which was originally part of AT&T.
After early challenges, Zaslav has successfully reduced debt and revitalized various brands, helping to make Warner Bros. the first studio to surpass $4 billion in box office revenue this year, alongside achieving 73 million subscribers for its HBO Max service globally.
Should Ellison decide to increase his offer, it’s speculated that Warner Bros. Discovery’s stock could substantially rise. Zaslav is reportedly planning to divide the company into two segments: one for studio and streaming operations and another for cable assets.
Zaslav remains hopeful that he can compel Ellison and other bidders to enhance their offers, as industry experts appraise the studio and streaming divisions alone at $30 per share.
“David feels he has accomplished the necessary rebuilding of the company and is prepared to sell at a premium,” remarked a source familiar with Zaslav’s perspective.
