Paramount Skydance Inc. seems well-positioned to take over Warner Bros. Discovery Inc., but the focus is primarily on the cable network, which has a strained history with Donald Trump, as noted by industry insiders.
The bidding for WBD, which boasts Hollywood’s leading studio and a top streaming service alongside HBO and CNN, officially kicked off at noon on Thursday, with Paramount Skydance, Comcast, and Netflix all making their offers.
Interestingly, reports suggest that CNN is viewed as a crucial factor in giving Paramount Skydance an edge over its competitors.
This interest stems from the fact that Larry Ellison, the tech powerhouse who owns PSKY, along with his son David, seem to be the only bidders keen on acquiring CNN as part of any deal.
They perceive CNN, issues included, as a profitable venture that’s worth the investment.
At the same time, President Trump has expressed a desire for CNN, frequently at odds with him during press interactions, to dial back its critical stance on his administration, according to a broadcast executive.
In this context, Ellison, a known Trump donor and co-founder of Oracle, is seen as someone who could potentially transform CNN.
Trump expects CNN to follow a similar path to what the Ellisons are doing with their CBS subsidiary, which recently brought in Bari Weiss, a center-right columnist, to help reduce left-leaning biases in their news coverage.
If Paramount Skydance prevails in the bidding, Weiss might also take on an editorial role at CNN, according to sources familiar with the situation.
“Navigating the Landscape”
Given these dynamics, the Ellisons’ bid doesn’t seem to face significant regulatory challenges from Trump’s administration.
On the other hand, Comcast and Netflix are likely to endure intense scrutiny from regulators.
As one communications lawyer pointed out, “The Ellisons might get a relatively smooth ride for approval, while Brian Roberts can expect a prolonged investigation that could last years.”
It’s important to note that the Ellisons are not merely aiming to gain control over CNN to appease Trump; officials indicate that they genuinely value CNN’s business, despite the decline in viewership compared to other networks.
Paramount Skydance executives believe that with CBS’s existing news framework and a push towards digital platforms, CNN’s profitability could further improve, even though it still rakes in about $500 million annually.
Ellison has the means to support such efforts.
Since the Post indicated that a WBD auction was on the horizon in September, David Zaslav, the shrewd CEO of WBD, has mentioned a target of “starting at 3,” implying $30 a share or a total valuation around $70 billion.
However, generating a legitimate bidding war is becoming increasingly doubtful.
Both Comcast and Netflix have only expressed interest in parts of WBD, which makes it unlikely they’ll go high on their bids.
When pieces of a company are sold, WBD risks incurring hefty tax implications often referred to as “tax leakage,” which could dampen its overall valuation.
Regulatory Hurdles
Moreover, Comcast and Netflix face significant regulatory challenges that Paramount does not, while Roberts intends to divest the critical MSNBC channel to ease some antitrust concerns.
However, Trump remains firm against tolerating the criticisms laid out by Rachel Maddow and others.
Attorneys involved in these dealings anticipate that if Comcast emerges victorious, the antitrust chief might file lawsuits and initiate prolonged investigations, especially over the merger of Universal Studios and Warner Bros.
Roberts, despite potential legal actions, is aware of the historical difficulties governments face in such litigations.
Ultimately, this could lead to a legal battle lasting nearly two years, and the WBD board might find that prospect unappealing.
Similar challenges exist for Netflix as it considers merging its leading streaming service with WBD’s third-ranking service. There are political dimensions to consider, too, with leadership at Netflix having longstanding ties to progressive movements.
This is why the Ellisons feel they could bid somewhat below $27 per share for WBD, falling short of Zaslav’s goal of $30.
