Comcast seems quite confident about its potential acquisition, yet many on Wall Street are expressing doubts.
The cable giant believes it has the financial muscle that Warner Bros. Discovery CEO David Zaslav is seeking, particularly for parts of the company like HBO Max and some high-profile studios.
However, the enthusiasm surrounding Comcast CEO Brian Roberts and banks like Goldman Sachs and Morgan Stanley has been met with skepticism. This is especially true in Hollywood, which is currently in a bidding frenzy for significant media assets. Final bids for Warner Bros. Discovery are expected later this week.
With a mix of financial challenges and regulatory issues, Comcast is seen as a dark horse in this bidding war, even if it manages to win, according to insiders.
An antitrust lawyer involved with the negotiations remarked, “Comcast’s stock is underperforming and it’s heavily leveraged. But the main issue is regulatory hurdles. The approval process could extend beyond two years, and even then, it’s likely to fail.”
A spokesperson for Comcast refrained from comment, though company officials assert they are well-positioned to capitalize on the situation.
They mentioned ongoing growth opportunities and highlighted their strong financial standing, claiming, “We have the best balance sheet and credit rating in the industry. We need to explore new avenues.”
This exploration may require significant resources. Warner Bros. Discovery, known for its successful studios and HBO Max’s large subscriber base, could be valued at around $70 billion.
There’s discussion that Roberts hopes to align with Goldman Sachs and Morgan Stanley to merge WBD and Comcast. Yet, Comcast has separated left-leaning networks like MSNBC and CNBC, leaving Roberts overseeing more mid-tier studios that contend with NBC and other channels for ratings.
What still leaves some questions is how he’ll financially support a bid that could cost tens of billions, considering Comcast’s current cash reserves are about $9 billion, alongside an A-minus bond rating and nearly $100 billion in existing debt, which could jeopardize stability if more borrowing occurs.
Despite these factors, Comcast’s stock has surged in the past year, though it’s down 36% compared to Disney’s nearly 6% decline and a 14% increase for the S&P.
Roberts’ ability to secure funding isn’t fully assured, especially in light of recent reports of him meeting with officials in Saudi Arabia for investment. Such foreign involvement in U.S. media properties might complicate regulatory approvals.
If Roberts secures funding, it’s important to note that regulatory approval from President Trump’s Justice Department is essential for any deal. Trump has historically been critical of the MSNBC leadership, which complicates matters for Roberts.
Meanwhile, reports indicate that Trump has allies at Paramount Skydance who are also looking to win the bidding war for WBD. Netflix is in the mix, too, and is reportedly considering a stock payment.
Trump’s support could potentially smooth the path for Paramount Skydance’s significant cash bid, which is almost $60 billion, and managed by David Ellison, the son of Oracle co-founder Larry Ellison, a billionaire donor to Trump.
