Warner Bros Discovery rejects Paramount offer, considers full sale amid media shakeup

WASHINGTON: Warner Bros Discovery said on Tuesday (Oct 21) that its board had rejected a buyout offer from Paramount Skydance valued at nearly US$60 billion, as the media giant weighs a possible full sale following unsolicited interest from several potential suitors.

A source familiar with the matter told Reuters that the Paramount Skydance bid, worth close to US$24 a share and mostly in cash, was turned down by the board earlier in the day. The offer would have included Warner Bros’ film and television studios, cable networks such as CNN and the HBO Max streaming platform.

Neither Warner Bros Discovery nor Paramount commented on the proposal. Shares of Warner Bros Discovery were up around 10 per cent in afternoon trading.

COMPANIES EYE WARNER BROS ASSETS

Comcast is likely to examine Warner Bros Discovery’s assets, a source told Reuters, while Netflix is also among those showing interest, according to CNBC. Earlier reports indicated that Paramount Skydance chief executive David Ellison had been in talks to acquire the entire company.

Warner Bros Discovery, which owns franchises such as Harry Potter and Game of Thrones, announced in June that it would split its operations next year into studio-centric and cable-focused units — a move intended to separate its growing streaming business from its struggling traditional networks.

The board is considering several options, including maintaining its planned separation, selling the company in full, or pursuing separate transactions for its Warner Bros or Discovery Global businesses. It is also reviewing an alternative structure that would merge Warner Bros and spin off Discovery Global.

SALE COULD RESHAPE MEDIA LANDSCAPE

A sale or breakup would mark one of the most significant restructurings in the entertainment industry in years, potentially prompting other legacy media firms to revisit their own business models. Streaming competition has left traditional broadcasters burdened with debt, rising content costs and fragmented audiences.

Any deal for Warner Bros Discovery would give the buyer control of a major Hollywood studio and a leading streaming platform but also inherit roughly US$35 billion in debt.

The company’s shares, now valued at about US$45 billion, have risen more than 46 per cent since early September, when reports first surfaced of Paramount’s interest.

VALUATION AND SUITOR STRATEGIES

“Paramount is the most likely to purchase the company. For Netflix, a purchase would make more sense after the planned split, because the studio would be very valuable to Netflix but the TV networks not as much,” said eMarketer senior analyst Ross Benes.

Bank of America research analyst Jessica Reif Ehrlich estimated the company’s total value at about US$30 a share, noting that Warner Bros Discovery has not publicly commented on the offers.

“Given the company’s wealth of premium IP — Harry Potter, DC, Lord of the Rings, Game of Thrones — we continue to believe Warner Bros is an extremely attractive potential acquisition target,” she said in an investor note.

Comcast, meanwhile, is preparing to spin off its NBC Universal cable channels, including CNBC and USA Network, into a new company called Versant later this year.

Seth Shafer, a principal analyst at S&P Global Market Intelligence Kagan, said potential buyers including Paramount, Comcast, Netflix, Amazon and Apple “could see value in moving sooner rather than later to acquire the entirety of WBD versus waiting to purchase just the streaming and studio assets.”

ELLISON FAMILY’S GROWING MEDIA INFLUENCE

Skydance’s approach comes soon after its takeover of Paramount, underscoring the Ellison family’s ambition to expand their influence in global media amid a favourable US regulatory climate.

Analysts say David Ellison’s access to deep financial backing from his father, Oracle co-founder Larry Ellison, the world’s second-richest person, gives him the capital to pursue major acquisitions.

They also noted that the elder Ellison’s close ties with US President Donald Trump could ease regulatory scrutiny that would typically accompany such a merger.