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Chairpersons

Paramount's Secret Bids for Warner Bros. Discovery Reveal Tectonic Shift in Media Industry

Strategic Insights

— 2 min read

In a revealing letter to Warner Bros.' board of directors, Paramount's chief executive, David Ellison, laid out weeks of talks between the companies, including three offers to buy Warner Bros. Discovery. The bids, made over four weeks, started in mid-September and were rebuffed, including an offer that would have allowed Warner Bros.' chief executive, David Zaslav, to stay on as co-chief executive and co-chairman of a combined company. The move comes as Warner Bros. Discovery announced its intent to explore a sale, citing "unsolicited interest from multiple parties."

Key Takeaways:

  • Paramount made three offers to buy Warner Bros. Discovery over four weeks, starting in mid-September, with the latest bid delivered on October 13 offering $23.50 a share in cash and stock.
  • The offers represented an 87 percent premium to Warner Bros. Discovery's share price before its intent to make a bid for the company was first reported.
  • Paramount's offers included an attempt to retain Warner Bros.' chief executive, David Zaslav, as co-chief executive and co-chairman of a combined company.
  • The takeover of Warner Bros. Discovery by Paramount would create a scaled Hollywood champion, combining two of the largest studios, Warner Bros. and Paramount.
  • The deal would also bring together Paramount+ and HBO Max, two of the biggest streaming services, creating a formidable competitor to giants like Netflix and Amazon.
  • Analysts say that any bidder, including Paramount, will face close regulatory scrutiny given the media industry's consolidation and President Trump's animus for CNN.
  • Comcast and Amazon have expressed interest in bidding for Warner Bros. Discovery, which could pressure Paramount to further increase its offer.

Statistics:

  • Paramount's first bid was for $19 a share, increasing to $22 in late September, followed by an offer of $23.50 a share on October 13.
  • The offers represented an 87 percent premium to Warner Bros. Discovery's share price before its intent to make a bid for the company was first reported.
  • Warner Bros. shares closed at $20.53 on Wednesday.
  • Paramount's estimated value per share in a Warner Bros. Discovery breakup is around $15, far below the takeover price of $23.50 a share.
  • Comcast abandoned its bid for Time Warner Cable in 2015 amid antitrust scrutiny.
  • Amazon has more than 200 million subscribers, making it the country's second-largest streamer behind Netflix.

Sources:

  • "A letter from Paramount's chief executive, David Ellison, to Warner Bros.' board of directors"
  • "Warner Bros. Discovery said on Tuesday that it was initiating a sale because of 'the unsolicited interest of multiple parties' for both some parts and all of the company."
  • "Paramount's first bid was for $19 a share, before moving up to $22 in late September."
  • "Paramount's latest bid was delivered on Oct. 13, offering to pay the company's shareholders $23.50 a share in cash and stock."
  • "On Wednesday, Warner Bros. shares closed at $20.53."

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