Warner Bros. Would Be An Anchor for Netflix Says Laura Martin

Paramount Skydance Corp. launched a hostile takeover bid for Warner Bros. Discovery Inc. at $30 a share in cash, just days after the company agreed to a deal with Netflix Inc. The offer values Warner Bros. at $108.4 billion, including debt.

The bid compares with Netflix’s offer of $27.75 in cash and stock, for an enterprise value of about $82.7 billion including debt. Paramount’s offer is for all of Warner Bros., while Netflix is interested only in the Hollywood studios, HBO and the streaming business. Laura Martin Senior Analyst at Needham & Company joined Bloomberg Intelligence to discuss future of the Warner Brothers deal with Netflix and the hostile bid from Paramount.

While Netflix Inc. and Paramount Skydance Corp. vie for President Donald Trump’s blessings in their competing bids for Warner Bros. Discovery Inc., investors have an irony to consider.

The valuation of faltering cable TV networks like CNN, TNT and Discovery — among the TV industry’s least-coveted properties today — is much of what separates Paramount’s hostile takeover bid from Netflix’s friendly offer.

Paramount kicked the bidding war into high gear Monday, going directly to stockholders with a $30-a-share all-cash bid that values all of Warner Bros. at $108.4 billion, including debt. It’s aiming to derail Netflix’s agreement announced last week to buy Warner Bros.’ studios, streaming and HBO businesses for $27.75 a share in cash and stock.

The $2.25-a-share difference between the offers lies in those struggling cable channels, which Warner Bros. announced in June that it would spin off. Netflix’s offer doesn’t include the cable business while Paramount’s does. Paramount has suggested a value of $1 a share to Warner stockholders for those assets, while analysts say they may be worth closer to $4.

The lower you value the cable assets, the greater advantage Paramount’s bid has. If shareholders believe the cable operations are more highly valued, then Netflix’s bid, which assumes they will be spun off, means investors get an overall bigger sum of money.

Paramount Chief Executives Officer David Ellison and his team met Tuesday with investors at the UBS media conference in New York, trying to convince them their offer is better than Netflix, according to people familiar with their efforts.

For its offer, Paramount is pulling together $11.8 billion from the Ellison family and $24 billion from Middle East sovereign wealth funds. RedBird Capital Partners and Affinity Partners, the company led by President Trump’s son-in-law Jared Kushner, are also participating.

The bidding could go still higher. In a text message contained in regulatory filings, one of Paramount’s bankers told his Warner Bros. counterpart that the company’s $30-a-share offer isn’t their “best and final” proposal.

What’s more, Netflix has an option to match Paramount if Warner Bros. determines its offer is superior, according to filings. Netflix’s co-chief executive officers, Ted Sarandos and Greg Peters, told investors at the conference on Monday that they’re “extremely confident” their deal will be approved.

Warner Bros. has said it will respond to Paramount’s hostile bid within 10 business days.

The battle royale for Warner Bros. underscores just how critical a deep archive of top films and TV shows has become in streaming — the only growing part of the movie and TV industry today. Warner Bros. titles like Game of Thrones, Batman and Lord of the Rings, along with HBO Max, would significantly enlarge Paramount’s streaming business, which has about 80 million subscribers.

For Netflix, those same films and TV shows would feed a streaming service that already reaches more than 300 million households globally and cement the company’s lead over competitors like Walt Disney Co. and Amazon.com Inc.

How bad is the cable TV business today? So bad that two of the biggest US media companies are pulling away. Warner Bros. is spinning off its pay-TV networks to investors in a new company called Discovery Global by the third quarter of 2026.

--------

Watch Bloomberg Radio LIVE on YouTube

Weekdays 7am-6pm ET

Follow us on X

Subscribe to our Podcasts:

Bloomberg Daybreak

Bloomberg Surveillance

Bloomberg Intelligence

Balance of Power

Bloomberg Businessweek

Listen on Apple CarPlay and Android Auto with the Bloomberg Business app:

Apple CarPlay

Android Auto

Visit our YouTube channels:

Bloomberg Podcasts

Bloomberg Television

Bloomberg Originals