Warner Bros. Discovery's selection of bidders is expected to accelerate this week.
Monday marks the deadline for a second round of proposals, which Warner board members anticipate will bring improved offers from the three rivals vying for the prize. Comcast, Paramount and Netflix submitted non-binding initial bids last month, forming the auction floor.
Warner bankers have privately signaled to interested parties that this round may not be the final flexibility, but they anticipate that Monday's offers 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 choice before the winter holidays begin.
“The global media industry is on the verge of a historic transformation,” Bank of America media analyst Jessica Reif Ehrlich and three colleagues wrote in a Monday research report.
The sale of Warner Bros. would represent Hollywood's biggest consolidation since a buying spree that began 30 years ago with the purchase of Capital Cities by Walt Disney Co., which owns ABC and ESPN. That era culminated in the ill-fated sale of Time Warner 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 invaded the field, ushering in a streaming revolution that has dramatically altered consumer behavior, leaving the entertainment industry's financial foundation—bulky cable TV packages and blockbuster theatrical releases—on shaky legs.
Warner's current bidding war “reflects the economic reality… that mid-sized legacy media companies/studios can no longer compete with the unit economics of Netflix or the ecosystem of large tech players like Amazon,” Bank of America analysts wrote.
They said Larry Ellison family's Paramount and Comcast's NBCUniversal may feel the need to grow, prompting both to snap up Warner assets, which include the Warner Bros. film and television studios in Burbank, premium channel HBO and streaming service HBO Max.
Representatives for Warner, Paramount, Comcast and Netflix declined to comment.
Paramount is considered more likely to prevail, given the Ellison family's vast wealth and political connections.
President Trump considers Larry Ellison among his friends, which could ensure a smooth regulatory review process with the Justice Department. The president has indicated he wants Ellison to control CBS, currently under the Paramount-Skydance umbrella, and CNN, which is owned by Warner Bros. Discovery.
Paramount offers the most efficient acquisition, as it has expressed interest in purchasing all of Warner, including its cable channels, which include TBS, TNT, HGTV, Food Network and Animal Planet. Tech scion and Paramount chairman David Ellison informally initiated the bidding in September and submitted three bids by mid-October.
But Warner's board of directors rejected all three proposals as too low. The company then opened the process to other bidders, allowing Comcast and Netflix to join the field.
Ellison recently visited oil-rich countries in the Middle East and held preliminary talks with sovereign wealth funds about possible investments should Paramount win the Warner auction, according to two knowledgeable sources.
Shares of Warner Bros. Discovery rose less than 1% to $23.87 on Monday.
Some analysts expect a rise from Comcast, which is controlled by Philadelphia cable magnate Brian Roberts.
Warner Bros. Discovery CEO David Zaslav prefers Comcast to Paramount, people in the know say.
Through its ownership of European broadcaster Sky, Comcast has expanded its international presence.
But Comcast has significant debt and its stock has been stagnant for years.
Comcast and Netflix have expressed interest in buying just the studios, HBO and the streaming service.
Neither Comcast nor Netflix are interested in Warner's linear cable channels. Comcast plans to divest its own portfolio of cable networks, including USA Network, CNBC, MS NOW (formerly MSNBC) and Golf Channel, in a spinoff that should be completed in January. The cable channels will form an entity called Versant.
“The market is seeing the end of the era of cable television,” Bank of America analysts wrote. “The Warner Bros. studio is the jewel in the crown, with [intellectual property] from Harry Potter to DC Comics, Game of Thrones (and much more).”
Buying Warner Bros. and HBO would boost the television production capabilities of NBCUniversal and its lagging streaming service Peacock, which has struggled to generate scripted streaming hits.
Comcast executives also have an eye on beloved Warner franchises, including Superman and other DC comics, “The 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 Warner Bros. franchises. Additionally, Warner Bros. Television has long been among the industry's most successful show producers, giving rise to “The Big Bang Theory,” “Ted Lasso” and “The Pitt.”
Acquiring Warner Bros. would also give Netflix co-CEO Ted Sarandos a legendary movie studio, something Netflix currently lacks. The streamer's Los Angeles offices are located in a relatively small area overlooking the 101 Freeway.
Either combination would trigger layoffs in the media industry, which is already reeling from a slowdown in film and television production and the elimination of thousands of workers over the past two years.
Paramount has laid off 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 has also laid off staff as it struggled under a colossal debt load brought on by its latest merger: Discovery's $43 billion acquisition of WarnerMedia from AT&T in 2022.
Warner still has about $34 billion in debt.
