Warner Bros. Discovery, the owner of HBO, CNN and the Warner Bros. movie studio, just hung a “for sale” sign on its business.
In a lengthy statement released Tuesday morning, Warner Bros. Discovery said that it was considering a variety of deals, including a sale of the entire company or a spinoff of some assets, in response to interest from multiple potential buyers.
Warner Bros. Discovery’s announcement could set off a bidding war for one of Hollywood’s most iconic companies. A complete or partial sale of the media colossus would reshape the industry, shrinking the number of major companies and epitomizing Hollywood’s relentless march toward consolidation.
Any deal could also get drawn into a political crossfire, since it would almost certainly need approval from the Trump administration. Skydance’s acquisition of Paramount was approved by federal regulators after CBS agreed to pay President Trump $16 million to settle a lawsuit in which he accused “60 Minutes” of hurting his presidential campaign.
In June, Warner Bros. said it would split its streaming and studios business from its cable networks business. The move aims to unshackle promising parts of the company, like the HBO Max streaming service, from the profitable but decaying cable networks like TNT and CNN.
Paramount has expressed interest in Warner Bros. Discovery before that spinoff happens, recently submitting a bid to acquire the company for roughly $20 a share, according to two people familiar with its offer. Unlike other entertainment giants that are jettisoning their cable networks, Paramount is continuing to bet on traditional TV, which is still a major profit center.
David Ellison, the chief executive of Paramount, has been on a spending spree since he took over this summer. He has struck a deal to air matches from the Ultimate Fighting Championship, stream “South Park” on the Paramount+ service and acquire The Free Press, a news start-up.
Acquiring Warner Bros. Discovery would be on another order of magnitude, putting him atop one of the most powerful companies in Hollywood.
Since Paramount’s interest in Warner Bros. Discovery leaked several weeks ago, other potential suitors have come forward. Comcast has expressed interest in acquiring all or part of the company, according to three people with knowledge of internal discussions who spoke on the condition of anonymity.
Comcast, the media and cable giant behind the Universal movie studio and NBC News, is deep into a corporate reorganization that will spin off the company’s cable networks from the rest of its businesses. As a result, Comcast could be hesitant to get deeper into the cable TV businesses.
Executives at Warner Bros. Discovery expect the streaming business to be attractive to a variety of buyers, including tech companies like Netflix, Amazon and Apple. Some analysts think that one or more of those companies could also jump in to bid on all of Warner Bros. Discovery because of Paramount’s interest.
Warner Bros. Discovery did not name potential suitors in its statement on Tuesday. “While we aren’t going to get into the specifics of who has expressed interest, it is safe to assume it is multiple parties,” the statement said.
The company also said it would consider a deal similar to the Walt Disney Company’s 2019 acquisition of 21st Century Fox, which left out key businesses like Fox News. Such a structure could be appealing to some companies, including Comcast.
Jessica Reif Ehrlich, an analyst of Bank of America, said in an interview last week that Warner Bros. Discovery should consider a sale at a price of $30 per share. Its per-share price increased more than 10 percent, to $20.28, in midday trading, giving the company a market value of roughly $50 billion.
“These are assets that can’t be duplicated,” she said.
A major question hovering over any deal is the role of the Trump administration. Mr. Trump has taken aim at Comcast’s chairman, Brian Roberts, posting on social media in April that he is a “disgrace to the integrity of Broadcasting!!!” David Ellison’s father, Larry, is friendly with Mr. Trump, a relationship that could help with any deal with Paramount.
Merging Paramount and Warner Bros. Discovery would bring two of the most important news brands in America, CBS News and CNN, under the same corporate umbrella. That would likely mean additional scrutiny for the Ellison family, which has already drawn attention for appointing Bari Weiss, a co-founder of The Free Press, as editor in chief of CBS News.
European regulators, which would also need to approve a deal, may further complicate the review process.
The decision by David Zaslav, Warner Bros. Discovery’s chief executive, to sell or spin off parts of the company is a remarkable about-face from his initial pitch to Wall Street. When he combined WarnerMedia with Discovery Inc. three years ago, he told investors that the merged company would be better able to compete with streaming giants like Netflix.
Selling all of Warner Bros. Discovery would be a coda of sorts for Mr. Zaslav, an inveterate deal maker who has presided over a series of ever-larger mergers throughout his career. After he revamped Discovery, once a sleepy bundle of TV channels, Mr. Zaslav added Scripps Networks, a lifestyle TV juggernaut. He then added WarnerMedia. Along the way, Mr. Zaslav became a major player in Hollywood, a status he could be forced to relinquish in a sale of Warner Bros. Discovery.
Mr. Zaslav has considerable financial incentives to consider a sale, however. This summer, after consulting with his longtime mentor, the media magnate John Malone, Mr. Zaslav signed a new contract that pays him millions of dollars if the company changes hands.
Benjamin Mullin reports for The Times on the major companies behind news and entertainment. Contact him securely on Signal at +1 530-961-3223 or at [email protected].
Lauren Hirsch is a Times reporter who covers deals and dealmakers in Wall Street and Washington.
The post Warner Bros. Discovery Says It Is Considering a Sale appeared first on New York Times.
