Warner Bros. Discovery sent a shockwave through Wall Street and the entertainment industry when it was confirmed it was up for sale. The ball got rolling when it was revealed that Paramount Skydance had made an offer to purchase the company. Since then, other companies have reportedly pondered making an offer of their own, including Comcast and Netflix (though Netflix has since denied this).
The Warner Bros. Discovery board rejected Paramount's offer (the latest of three) on Tuesday, October 21. Per Reuters, Paramount made a $60 billion offer, split into 80% in cash and 20% in stock. The offer amounts to almost $24 a share ($23.50, to be exact, according to CNN Business). According to Reuters, this offer was deemed too low by WBD. Paramount Skydance CEO David Ellison, however, is not backing down.
According to The New York Times (via The Wrap), in order to make its offer more attractive for the WBD board, Paramount offered Zaslav the position of co-CEO and co-chairman of the company that would result from merging Warner Bros. Discovery and Paramount Skydance. As mentioned, Paramount's determination to purchase WBD is strong. In a letter to the Warner Bros. Discovery board obtained by The New York Times, Ellison wrote:
"We are confident that we are the best partner for WBD, with a combination of our two companies created a scaled Hollywood champion to the benefit of both our companies' shareholders, consumers and the entertainment industry at large."
According to CNN Business, Warner Bros. Discovery and Paramount Skydance are, "playing their parts perfectly" in the negotiations, which presumably means WBD intends to get Paramount to raise its latest offer. Per the outlet, however, the companies Zaslav considers good candidates to merge with WBD are actually Amazon and Netflix. The latter, however, has expressed disinterest in purchasing the studio. During a market analyst call (via The Hollywood Reporter), Netflix co-CEO Ted Sarandos stated the streamer is fairly unintersted in putting its hat in the ring for the ownership of Warner Bros. Discovery:
"Nothing is a must for us to meet our goals that we have for this business [...] When it comes to M&A [Mergers and Acquisitions] opportunities, we look at them—and we look at all of them—and we apply the same framework and lens that we look at when we look to invest. Is it a big opportunity? Is there additional value in ownership? [...] We're predominantly focused on growing organically, investing aggressively and responsibly into the growth and returning access cash flow to shareholders."
In simpler terms, Sarandos is stating that Netflix is more focused on growing organically, rather than doing so through corporate acquisitions.
Despite the rumors involving Netflix and Amazon, however, things aren't necessarily over for Paramount. This is because of what Ellison mentioned in his letter to the WBD board regarding the strategic benefit of merging WBD and Paramount Skydance. According to analysts (via CNN Business), Ellison is correct. Analyst Robert Fishman of MoffettNathanson (an equity research publisher), for example, explained (via The Hollywood Reporter):
"First, as we’ve previously acknowledged, a potential Paramount Skydance bid for the whole company makes a lot of strategic sense by owning a much stronger slate of IP at Warner Bros. and seeking scale with the combined HBO Max and Paramount+ platforms. Combining the linear network portfolios would also likely yield significant cost synergies, while unlocking strategic benefits from pairing CBS News with CNN and leveraging the long-standing CBS-Turner partnership for NCAA's March Madness Final Four, plus other overlapping sports rights portfolios."
We will keep you updated on any news from the Warner Bros. Discovery sale.