Now, the real jockeying begins for the future of Warner Bros. Discovery.
Paramount, Comcast and Netflix are each expected to submit proposals for all or parts of the storied media giant by Thursday’s deadline, according to people familiar with the process but not authorized to speak publicly. The nonbinding bids mark the completion of the auction’s first phase, accelerating the potential sale of some of the best-known brands in entertainment, including HBO, CNN and Warner Bros. film and television studio.
Warner Bros. Discovery Chief Executive David Zaslav and the company’s board have unanimously rejected three earlier overtures from Paramount’s David Ellison, including a largely cash $23.50 a share offer, deeming it too low. Thursday’s entry of new bidders could boost the value of the struggling media company to more than $60 billion.
Analysts say Paramount should have an edge because its bid is backed by David Ellison’s father, Larry, who is among the top five billionaires in the world. But it’s not a sure bet that Paramount will come away with the prize.
“I don’t know that I’m calling a horse,” Julie Clark, senior vice president of media and entertainment at information firm TransUnion, said Wednesday. “They all have a lot to gain — and a lot to lose.”
Warner’s board wants to pick a preferred partner by year’s end, in part to determine whether they should continue working on their previously announced plan to carve the company into two parts.
Should Paramount prevail in its bid to buy the entire company, Warner Bros. Discovery would abandon its efforts to create a stand-alone streaming and studios entity called Warner Bros., and a second publicly traded firm, Discovery Global, comprised of CNN, HGTV, TLC and other basic cable channels.
But Comcast and Netflix are interested only in Warner’s Burbank studios and HBO — not the company’s other cable networks, people familiar with the process said. A Warner breakup then would go forward to facilitate those deals.
Warner Bros., Paramount and Universal Pictures all date back a century to Hollywood’s fledgling days. Warner’s sale will transform the business no matter which company wins the bidding, and the resulting handoff could bring the consolidation of two historic film studios.
A merger also would turbo-charge the shift to streaming.
But the move would prompt layoffs in an industry already reeling from a production slowdown and the elimination of thousands of workers over the last two years, including at Warner, which has struggled to operate under a colossal debt burden brought on by its last merger — Discovery’s $43-billion takeover of WarnerMedia from AT&T in 2022.
“That was a failed acquisition,” said Kenneth Leon, director of research at the financial firm CFRA.
Antitrust regulators are expected to pore over any deal.
However, President Trump has made his preference clear: He’s rooting for 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 Middle Eastern countries, holding preliminary talks with sovereign-wealth funds about potentially investing should Paramount win the Warner auction, according to two knowledgeable sources.
NETFLIX
Netflix is the wild card.
“For Netflix, this [acquisition] would be out of character,” Leon said, adding that making a multi-billion purchase would represent “the total opposite of Netflix’s success for over two, nearly three decades, which is to have organic growth with some tactical acquisitions — but very small ones.”
Still, Netflix has its eye on the Warner Bros. stable of successful franchises that include Superman and other DC Comics, “The Matrix,” “Game of Thrones,” Harry Potter and “The Big Bang Theory.”
For its part, Netflix has generated a handful of blockbuster franchises, including “Squid Game,” “Bridgerton” and “Stranger Things,” but the creators of the last series are decamping to Paramount.
If Netflix wins the assets, including the HBO Max streaming service, it would become the industry’s undisputed king. The company already boasts the most streaming subscribers — more than 300 million worldwide — and it would add another 73 million with HBO and HBO Max.
“Netflix has been making bigger moves,” Clark said, noting its high-dollar investments in the NFL and other sports. “They have the cash and they have the distribution. Is this just Netflix solidifying themselves in this space?”
Buying Warner Bros. would also give Netflix Co-Chief Executive Ted Sarandos a prestigious movie studio lot — something Netflix currently lacks. Its Hollywood operations are crowded on a relatively small tract overlooking the 101 Freeway.
But a Southern California congressman has waved a warning flag.
“Netflix currently wields unequaled market power,” Rep. Darrell Issa (R-Vista) wrote in a letter to Atty. Gen. Pam Bondi and Federal Trade Commission Chairman Andrew N. Ferguson earlier this week.
“Adding both HBO Max’s subscribers and Warner Bros.’ premier content rights would further enhance this position, reportedly 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
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 chief executive of the modest cable programming company then overseen by mogul John Malone.
Comcast is in the process of spinning off its cable TV channels, including CNBC, USA Network, MS NOW (previously MSNBC) and the Golf Channel. Comcast President Mike Cavanagh, who runs NBC, has made it clear the Philadelphia-based conglomerate has little appetite to take on Warner’s basic cable networks.
But company executives are keenly interested in Warner Bros., believing it would make a dream fit with 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 streaming operations would boost NBCUniversal’s under-performing 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 studios business … and HBO.”
Warner Bros. Television has long been the premier studio for cranking out hit shows and HBO remains an industry tastemaker with its award-winning fare. The companies’ two studio complexes sit 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 its prospects with the Warner board.
Additionally, Trump has made his disdain for Comcast Chairman Brian Roberts widely known in derogatory Truth Social posts, which could make the regulatory process for Comcast particularly bumpy while Trump is president.
PARAMOUNT
The Ellison family’s Skydance and RedBird Capital Partners benefited from the warm relations that Larry Ellison, the co-founder of software company Oracle, has with Trump to get the Paramount deal over the finish line.
Skydance and RedBird consolidated Paramount in August, one month before turning their attention to buying Warner Bros. Discovery to build a more formidable company.
“Paramount lacks top-tier [intellectual property],” TD Cowen media analyst Doug Creutz wrote in a recent report. “Their biggest franchise is Tom Cruise, who is 63 and does his own stunts.”
Larry Ellison has agreed to guarantee Paramount’s bid for Warner Bros.
His 42-year-old son, David, also has had discussions with Middle Eastern sovereign wealth funds to round up outside money should Paramount’s bid prove successful, according to knowledgeable people. The Financial Times first reported on Ellison’s conversations with Saudi Arabia’s Public Investment Fund.
Paramount’s previous offer for Warner Bros. Discovery included 80% cash and 20% stock in an effort to entice Warner board members. Paramount wants to avoid piling on the debt, which is what stymied Zaslav’s efforts to build Warner into a streaming giant.
Buying Warner Bros. Discovery would give Paramount more prolific movie production, robust franchises and a vibrant television studio, which over the years has produced some of the biggest hits for CBS, which is owned by Paramount.
Paramount could also use Warner Bros. cartoon properties and HBO content, including “Game of Thrones,” to build its video game business. And it might move its operations from Paramount on Melrose Avenue to the larger Warner lot.
Clark sees the Warner Bros. Discovery auction as a consequential inflection point for the industry. “Fast-forward a couple of years, and we will look back on this moment as the building of the new [Hollywood] and the new walled gardens around content.”
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