Paramount Skydance has not yet officially approached Warner Bros. Discovery regarding a widely speculated acquisition bid. CEO David Zaslav appears apprehensive about the prospect of external bidders, particularly as potential contenders gather insights about the company.
Roughly two weeks have passed since the news broke when Paramount Skydance CEO David Ellison, backed by his father Larry Ellison’s considerable wealth, revealed plans for an all-cash bid for Warner Bros. Discovery.
This buyout proposal could kick off discussions about a merger, potentially valued at over $50 billion. Ellison is undeniably in a strong financial position; after all, his father ranks as the second richest individual globally, with an estimated net worth of $370 billion.
The bid signifies ambitious plans to construct a large media empire, especially as Ellison has just finalized an $8 billion acquisition of Paramount.
However, since those initial reports, communication has been rather muted. Sources suggest that the Ellisons, including Redbird Capital partners, are contemplating how best to approach Zaslav. They are cautious about making a hostile bid for Warner Bros. Discovery, recognizing Zaslav’s desire for competitive bidding.
“They’re strategizing on how to approach Zaslav,” noted a media insider familiar with the matter.
Within Skydance, there’s discussion about reaching out to media mogul John Malone, who has a long history with Zaslav, in hopes of influencing Zaslav’s decision. Malone, a significant Verizon shareholder, had previously supported the merger that positioned Zaslav in his current role, but it remains uncertain whether he will advocate for Ellison’s offer or counsel otherwise.
On a related note, insiders believe an official outreach to Zaslav could happen soon.
Zaslav appears to be enjoying his current position. He is contemplating breaking the company into separate units, seeking to enhance earnings from streaming and studio divisions, or maintaining smaller operations should that approach prove necessary.
There are rumors that he is evaluating offers from various companies, including Netflix and Amazon, for parts of his business. It seems he’s not too concerned about Ellison’s recent statements to CNBC about Warner Bros. Discovery’s stock values, potentially indicating bids around $22-$24.
Neither Skydance nor Zaslav’s representatives provided comments on the situation.
Notably, Zaslav has enlisted Goldman Sachs to help in exploring options for selling parts of the company. His planned division will separate streaming and studio assets from traditional cable operations.
Having a strong background at NBCU before joining Discovery in 2006, Zaslav orchestrated the $43 billion merger between Discovery and WarnerMedia in 2022, which shaped the current structure of Warner Bros. Discovery. His leadership has involved significant cost reductions due to the substantial debts stemming from the merger.
However, his tenure has not been without challenges. He terminated contracts involving the WBD and the NBA over cost concerns, axed several projects such as “Batgirl,” and had mixed results with rebranding efforts for HBO Max which was reverted back after failed adjustments. As a result, WBD has faced stock declines.
Contrary to earlier issues, in the past year, Zaslav has made strides in regaining momentum. His studio is reportedly generating a consistent flow of successful titles, and HBO has matched the profitability of its streaming counterpart. Despite discussions around CNN’s rating struggles, Zaslav’s cable news outlet remains profitable and continues to attract attention.
Analysts on Wall Street have noticed these changes and are raising their price targets for WBD, now nearly $20 higher than its current levels, buoyed by talk of Ellison’s potential acquisition.
Ellison seems to be aiming for a share price nearing $40, which may clarify why the Ellisons haven’t formalized their offer yet.
