Warner Bros. Discovery targets Christmas for sale or split plans; Paramount in limbo
Paramount Skydance CEO David Ellison speaks at the Bloomberg Screentime conference in Los Angeles on October 9, 2025.
Patrick T. Fallon | Afp | Getty Images
Paramount Skydance Warner Bros. It has already informed Discovery that it believes the $23.50-per-share buyout offer is in the best interest of shareholders. Now WBD needs to plan what to do if the board disagrees.
WBD It is open for sale and plans to publicly announce its plans in mid- or late-December, according to people familiar with the matter who asked not to be named because the discussions are private. The former media giant, led by Chief Executive Officer David Zaslav, is deciding whether to split the company in two, sell some assets or sell the entire company.
Paramount has sent multiple letters to WBD’s board of directors explaining why its offer is more valuable to shareholders than splitting the company, signaling that negotiations could become more aggressive if WBD chooses other options. CNBC reviewed copies of two of the letters.
A portion of the October 13 letter to Paramount specifically details the company’s claim that its latest offer of $23.50 per share “provides superior value” to WBD shareholders compared to any plausible plan to split the company.
About a week after receiving that letter, WBD said it would begin “a comprehensive review of strategic alternatives to determine the best path forward to unlock the full value of our assets.”
The sale process was officially launched after WBD announced in June that it would split into two companies: Warner Bros., which will include WBD movie properties and streaming service HBO Max. a broadcast and studio company that will be named eponymous, and a global network company called Discovery Global that will house CNN, TNT Sports and Discovery, among other businesses. Both companies would trade publicly on their own.
Strategic options are not mutually exclusive. Given the regulatory approval process, which could take a year (or more), splitting the company in two and then selling one or both parts would be the most tax-efficient route to sell, according to people familiar with the matter. The spin-off, which is expected to be completed by April, is a tax-free transaction.
comcast And netflix They were interested in purchasing studio and broadcast assets, CNBC previously reported. Familiar sources say that if Warner Bros. If Discovery decides the best way to create value is to sell Warner Bros., it plans to make that announcement in December, before the split occurs, he said.
Comcast President Mike Cavanagh said in the company’s earnings call last week that such an acquisition would complement its post-Versant-spin NBCUniversal business.
Warner Bros. Discovery is scheduled to report third-quarter earnings Thursday morning.
Paramount’s hostile decision
Warner Bros. Discovery rejected three different offers from Paramount to take over the entire company. The last one, at $23.50 per share, consisted of 80% cash and 20% equity. CNBC reported last month.
According to sources familiar with the company’s thinking, Paramount executives agreed with Warner Bros. He’s willing to wait to see whether Discovery’s board decides to join friendly sales talks.
But if WBD hesitates in its decision or decides to move in a different direction, Paramount is discussing submitting an offer directly to shareholders and formalizing a hostile bid for the company, sources said.
According to sources familiar with the matter, Warner Bros. Discovery asked Paramount to sign a nondisclosure agreement that included a cease-and-desist clause that would prevent Paramount from submitting a hostile tender offer in exchange for access to the data room. One person said Paramount did not sign the NDA to keep its options open.
Warner Bros. Spokespeople for Discovery and Paramount declined to comment.
If Paramount appeals directly to shareholders, its offer could be rejected by Warner Bros. He will argue that Discovery is outperforming its closing price on September 10 (the day before the Wall Street Journal reported that Paramount was preparing an offer for the company). Warner Bros. Discovery closed at $12.54 per share on September 10. The offer of $23.50 per share is 87% higher than the so-called unaffected share price.
Warner Bros. Discovery will need to convince its shareholders that splitting the company or merging one of its units with another entity, such as NBCUniversal, is more shareholder-friendly than an outright sale.
Paramount wrote to Warner Bros. in an October 13 letter obtained by CNBC. He had already explained that account to Discovery. Warner Bros. The argument in the letter sent to Discovery’s board of directors and signed by Paramount Skydance Chairman and CEO David Ellison is as follows:
“We understand that you and your leadership team are optimistic that your planned separation will create potential value. However, a more objective analysis yields results well below what WBD shareholders considered in our proposal. We analyzed the value of the planned separation to WBD shareholders at the end of 2028 based on optimistic assumptions, including:
- Warner Bros. has outperformed consensus EBITDA by ~$500 million (10%) and is traded in the same group as Disney, despite the iconic global company Disney represents across all its business units
- Discovery Global achieves consensus EBITDA despite meaningful downside headwinds, with analyst research for the business trading in a “sum of the parts” multiples environment
- An example 25-40% M&A bonus applied to Warner Bros.
Based on these assumptions, the planned spin-off would result in a current value for WBD shareholders of less than $15 per share on a trading basis, or Warner Bros. “It will generate a value of ~$18 to ~$20 per share, including a strong but highly uncertain M&A premium for the company.”
Regulatory uncertainty
Paramount may also defend its deal for all of Warner Bros. According to the Chairman, Discovery is well positioned to receive regulatory approval. Donald Trump’s recent kind words about Ellison and his father, Larry, who is one of the richest people in the world and could contribute tens of billions of dollars of his personal money to help finance a transaction.
Trump: “I think it’s great, you have a new leader” mentioned David Ellison During an interview on CBS’ “60 Minutes” last week. “I think one of the best things that can happen is this show and new ownership, CBS and new ownership. I think it’s the greatest thing that’s happened to a free, open, good press in a long time.”
On the contrary, Trump has repeatedly criticized Comcast CEO Brian Roberts, calling him “rascal” and a “thin ball“
Some analysts have speculated that Comcast will be selling out of Warner Bros. He suggested he might try to make a deal with Discovery that would spin out NBCUniversal and combine it with its studio and broadcast assets.
It’s unclear whether shareholders will be optimistic about Discovery Global’s or Warner Bros.’ future prospects as independent entities.
Discovery Global’s collection of linear cable networks such as TNT, TBS and CNN are facing declines in advertising rates as well as annual cable subscriptions falling by the millions.
Warner Bros.’ If Comcast, Paramount and Netflix are potential buyers, HBO Max and Warner Bros. the movie studio can get a sizeable M&A bonus in a sale; but the price must be high enough to convince WBD shareholders that this is a better option than selling the entire company.
Still, even if Paramount decides to take the offer directly to shareholders, there’s no guarantee the tender offers will be successful.
Warner Bros., which has held the stock for at least a year to hold a special meeting to potentially fight off a hostile bid. A threshold of only 20% of Discovery shareholders is required. a company application. Long-term Warner Bros. Discovery shareholders might argue that current management and the board are the company’s best managers.
Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC. Versant would become CNBC’s new parent company, based on Comcast’s planned Versant spinoff.
