Now the real fight for the future of Warner Bros. Discovery begins.
Paramount, Comcast and Netflix are expected to submit proposals for all or part of the storied media giant by Thursday's deadline, according to people familiar with the process but not authorized to speak publicly. The non-binding bids mark the completion of the first phase of the auction, accelerating the potential sale of some of the best-known brands in entertainment, including film and television studios HBO, CNN and Warner Bros.
Warner Bros. Discovery CEO David Zaslav and the company's board unanimously rejected three previous proposals from Paramount's David Ellison, including a largely cash offer of $23.50 per share, as too low. The entry of new bidders on Thursday could boost the value of the struggling media company to more than $60 billion.
Analysts say Paramount should have an advantage because its bid is backed by David Ellison's father, Larry, who is among the world's top five billionaires. But it's not a sure bet that Paramount will take the prize.
“I don't know if I'm calling a horse,” Julie Clark, senior vice president of media and entertainment at information firm TransUnion, said Wednesday. “Everyone has a lot to gain and a lot to lose.”
Warner's board wants to choose a preferred partner by the end of the year, in part to determine whether they should continue working on their previously announced plan to split the company into two parts.
If Paramount prevails in its attempt to buy the entire company, Warner Bros. Discovery would abandon its efforts to create an independent streaming and studio entity called Warner Bros., and a second publicly traded company, Discovery Global, made up of CNN, HGTV, TLC and other basic cable channels.
But Comcast and Netflix are only interested in Warner's studios in Burbank and HBO, not the company's other cable networks, people familiar with the process said. A breakup of Warner would then occur to facilitate those deals.
Warner Bros., Paramount and Universal Pictures date back a century to the fledgling days of Hollywood. The sale of Warner will transform the business no matter which company wins the bid, and the resulting transfer could bring about the consolidation of two historic film studios.
A merger would also drive the shift toward streaming.
But the move would trigger layoffs in an industry already reeling from a slowdown in production and the elimination of thousands of workers over the past two years, including at Warner, which has struggled to operate under a colossal debt load brought on by its latest merger: Discovery's $43 billion acquisition of WarnerMedia from AT&T in 2022.
“That was a failed acquisition,” said Kenneth Leon, director of research at financial firm CFRA.
Antitrust regulators are expected to scrutinize any deal.
However, President Trump has made his preference clear: He supports Ellison, who dined at the White House on Tuesday night, along with other tech moguls, including Apple's Tim Cook and Tesla's Elon Musk, who toasted Crown Prince Mohammed bin Salman of Saudi Arabia.
Ellison and his investor RedBird Capital Partners have already visited oil-rich countries in the Middle East and have held preliminary talks with sovereign wealth funds about possible investments should Paramount win the Warner auction, according to two knowledgeable sources.
NETFLIX
(Myung J. Chun / Los Angeles Times)
Netflix is the wild card.
“For Netflix, this [acquisition] “It would be out of line,” León said, adding that making a multibillion-dollar purchase would represent “the complete opposite of Netflix's success for more than two, almost three decades, which is having organic growth with some tactical, but very small, acquisitions.”
Still, Netflix has its eyes on Warner Bros.' stable of successful franchises that include Superman and other DC Comics comics, “The Matrix,” “Game of Thrones,” Harry Potter and “The Big Bang Theory.”
For its part, Netflix has spawned a handful of blockbuster franchises, including “Squid Game,” “Bridgerton” and “Stranger Things,” but the creators of the latest series are moving to Paramount.
If Netflix wins the assets, including the HBO Max streaming service, it would become the undisputed king of the industry. The company already has the largest number of streaming subscribers (more than 300 million worldwide) and would add another 73 million with HBO and HBO Max.
“Netflix has been making bigger moves,” Clark said, noting its high-value investments in the NFL and other sports. “They have the cash and the distribution. Is it just that Netflix is solidifying itself in this space?”
Buying Warner Bros. would also give Netflix co-CEO Ted Sarandos a prestigious movie studio lot, something Netflix currently lacks. Its Hollywood operations are crammed into a relatively small area overlooking the 101 Freeway.
But one Southern California congressman has raised a warning flag.
“Netflix currently wields unmatched market power,” Rep. Darrell Issa (R-Vista) wrote in a letter to the prosecutor. Gen. Pam Bondi and Federal Trade Commission Chairman Andrew N. Ferguson earlier this week.
“Add both HBO Max and Warner Bros. subscribers.” Premium content rights would further enhance this position, pushing the combined entity above a 30 percent share of the streaming market,” Issa wrote, noting that percentage would cross a problematic threshold “under antitrust law.”
COMCAST
(Myung J. Chun / Los Angeles Times)
Comcast, which owns NBCUniversal, appears to be Zaslav's preferred bidder.
The executive spent his formative years running NBC's cable distribution unit before jumping to Discovery in 2007 to become CEO of the modest cable programming company then overseen by mogul John Malone.
Comcast is in the process of spinning off its cable television channels, including CNBC, USA Network, MS NOW (formerly MSNBC) and Golf Channel. Comcast Chairman Mike Cavanagh, who runs NBC, has made clear that the Philadelphia-based conglomerate has little desire to take on Warner's basic cable networks.
But company executives are very interested in Warner Bros., believing it would be a dream fit for NBCUniversal's entertainment operations, including its theme parks.
Comcast has been investing heavily in live sports, including deals with the NBA and Major League Baseball, and its Universal Studios theme park business, including opening its Epic Universe near Orlando earlier this year.
Comcast has the rights to Harry Potter, a major Warner Bros. franchise, for its parks. Buying the studio would give Comcast a treasure chest of other characters to build new attractions, including Superman, Batman, Wile E. Coyote and the fictional scientists from “The Big Bang Theory.”
“Imagine having a 'Game of Thrones' world at Universal,” said Clark, the analyst.
Warner's studio and HBO Max's streaming operations would boost the underperformance of NBCUniversal's Peacock streaming service, which has struggled to produce scripted streaming hits.
“Peacock today is, at best, a second-tier player in the market,” Leon said. “Everyone would want the diamond in the rough, which is really the business of the studios… and HBO.”
Warner Bros. Television has long been the premier studio for producing hit shows and HBO continues to be a trend-setter in the industry with its award-winning fare. The companies' two studio complexes are located adjacent in Universal City and Burbank.
But Comcast's proposal is expected to include a heavy stock component and offer less cash than Paramount. That could cloud his prospects with the Warner board.
Additionally, Trump has made his disdain for Comcast Chairman Brian Roberts widely known in disparaging Truth Social posts, which could make Comcast's regulatory process particularly bumpy while Trump is president.
SUPREME
(Brian van der Brug/Los Angeles Times)
The Ellison family's Skydance and RedBird Capital Partners benefited from the warm relationships that Larry Ellison, co-founder of the software company Oracle, has with Trump to get the Paramount deal over the finish line.
Skydance and RedBird consolidated Paramount in August, a month before turning its attention to purchasing Warner Bros. Discovery to build a more formidable company.
“Paramount lacks top-notch technology [intellectual property]”TD Cowen media analyst Doug Creutz wrote in a recent report. “Their biggest franchise is Tom Cruise, who is 63 years old and does his own stunts.”
Larry Ellison agreed to guarantee Paramount's bid for Warner Bros.
His son David, 42, has also held talks with Middle Eastern sovereign wealth funds to raise outside money should Paramount's bid prove successful, according to people familiar. Ellison's talks with Saudi Arabia's Public Investment Fund were first reported by the Financial Times.
Paramount's previous offer for Warner Bros. Discovery included 80% cash and 20% stock in an effort to woo Warner board members. Paramount wants to avoid accumulating debt, which is what hampered Zaslav's efforts to turn Warner into a streaming giant.
Buying Warner Bros. Discovery would give Paramount more prolific film production, strong franchises and a vibrant television studio, which over the years has produced some of the biggest hits for Paramount-owned CBS.
Paramount could also use Warner Bros. cartoon properties and HBO content, including “Game of Thrones,” to build its video game business. And it could move its Paramount operations on Melrose Avenue to Warner's larger lot.
Clark sees the Warner Bros. Discovery auction as a major turning point for the industry. “If we fast forward a couple of years, we will remember this moment as the construction of the new [Hollywood] and the new walled gardens around the contents.”
