With new bids, Warner Bros. Discovery looks to narrow the auction field
Warner Bros. Studios in Burbank, CA on Saturday, Feb. 8, 2025. (Myung J. Chun/Los Angeles Times)
Warner Bros. Discovery’s winnowing of bidders is expected to accelerate this week.
Monday marks the deadline for a second round of proposals, which Warner’s board members anticipate will bring sweetened bids from the three rivals vying for the prize. Comcast, Paramount and Netflix each submitted initial non-binding offers last month, forming the auction’s floor.
Warner bankers privately have signaled to the interested parties that this round may not be the final flex, but they do anticipate that Monday’s bids will help them zero in on a preferred merger partner, according to people close to the process who were not authorized to comment.
Warner Bros. Discovery hopes to make its pick before the winter holidays begin.
“The global media industry stands at the precipice of historic transformation,” Bank of America media analyst Jessica Reif Ehrlich and three colleagues wrote in a Monday research report.
The sale of Warner Bros. represents Hollywood’s biggest consolidation since a buying spree that began 30 years ago with Walt Disney Co.’s purchase of Capital Cities, which owned ABC and ESPN. That era was capped by Time Warner’s ill-fated sale in the early 2000s to dial-up internet service provider AOL — a disastrous union that plundered the value of Warner’s prestigious properties. It took more than a decade for the company to recover.
Since then, Netflix, Amazon and Apple have swarmed the field, ushering in a streaming revolution that has dramatically altered consumer behavior, leaving the entertainment industry’s financial foundation — bulky cable TV bundles and blockbuster theatrical releases — on shaky legs.
Warner’s current bidding war “reflects the economic reality … that mid-sized legacy media studios/companies can no longer compete with the unit economics of Netflix or the ecosystem of large tech players such as Amazon,” the Bank of America analysts wrote.
They noted that both the Larry Ellison family’s Paramount and Comcast’s NBCUniversal may feel the need to bulk up, prompting both to claw for Warner’s assets, which include the Warner Bros. film and television studios in Burbank, premium channel HBO and streaming service HBO Max.
Representatives of Warner, Paramount, Comcast and Netflix declined to comment.
Paramount is seen as most likely to prevail, given the Ellison family’s vast wealth and political connections.
President Trump considers Larry Ellison among his friends, which could assure a smooth regulatory review process with the Justice Department in the United States. The president has indicated he wants to see Ellison control CBS — currently under the Paramount-Skydance umbrella — and CNN, which is owned by Warner Bros. Discovery.
Paramount offers the most efficient take-over as it has expressed interest in buying all of Warner, including its cable channels that include TBS, TNT, HGTV, Food Network and Animal Planet. Tech scion and Paramount Chairman David Ellison informally kicked off the bidding in September, making three offers by mid-October.
But Warner’s board rejected all three proposals, considering them to be too low. The company then opened the process to other bidders, allowing Comcast and Netflix to join the field.
Ellison recently visited oil-rich Middle Eastern countries, holding preliminary talks with sovereign-wealth funds about potentially investing should Paramount win the Warner auction, according to two knowledgeable sources.
Warner Bros. Discovery shares traded around $24 on Monday.
Through its ownership of the European broadcaster Sky, Comcast has widened its international footprint.
But Comcast carries significant debt and its stock has been stalled for years.
Comcast and Netflix have each expressed interest in buying only the studios, HBO and the streaming service.
Neither Comcast nor Netflix are interested in Warner’s linear cable channels. Comcast is planning to jettison its own portfolio of cable networks, including USA Network, CNBC, MS NOW (formerly MSNBC) and Golf Channel, in a spin-off that should finalize in January. The cable channels will form a new entity called Versant.
“The market is witnessing the endgame of the cable TV era,” the Bank of America analysts wrote. “The Warner Bros. studio is the crown jewel, with [intellectual property] ranging from Harry Potter to DC Comics to Game of Thrones (and much more).”
Buying Warner Bros. and HBO would boost NBCUniversal’s television production capabilities and its lagging Peacock streaming service, which has struggled to mint scripted streaming hits.
Comcast executives also have an eye on Warner’s beloved franchises that include Superman and other DC Comics, “Lord of the Rings,” and “The Matrix,” which could provide more characters for its growing Universal Studios theme parks.
Netflix also sees great value in the Warner Bros. franchises. In addition, Warner Bros. Television has long been among the industry’s most successful show producers, giving birth to “The Big Bang Theory,” “Ted Lasso,” and “The Pitt.”
Scooping up Warner Bros. would also give Netflix Co-Chief Executive Ted Sarandos a legendary movie studio lot — something Netflix currently lacks. The streamer’s L.A. offices sit on a relatively small tract overlooking the 101 Freeway.
Any of the combinations would prompt layoffs in the media industry, which is already reeling from a TV and film production slowdown and the elimination of thousands of workers over the last two years.
Paramount has shed more than 2,600 workers in recent months. The Ellison family and RedBird Capital Partners consolidated their purchase of Paramount in August.
Warner Bros. Discovery also has purged staff as it has struggled under a colossal debt burden brought on by its last merger — Discovery’s $43 billion takeover of WarnerMedia from AT&T in 2022.
Leave a Comment
Your email address will not be published. Required fields are marked *