Shares in Warner Bros. Discovery soared to their highest level since 2022 after the company affirmed interest from “multiple parties” in potentially acquiring all or part of its empire.
Paramount has already been in pursuit of WBD, and news of its bid several weeks ago boosted the long-moribund stock. On Tuesday, it closed at $20.33, up 11% on moderately above-average trading volume.
While shareholders cheered the idea that a bidding war could help finally get them above water after a three-and-a-half-year merger misadventure, Wall Street analysts see Paramount as the heavy favorite. Comcast and Netflix (despite ample cold water being poured on the idea by Co-CEO Greg Peters this month) have emerged as possible bidders. Each, though, faces far more complications than Paramount, whose CEO, David Ellison, is backed by his father, Larry’s vast fortune.
“We continue to think that a transaction with Paramount is reasonably likely,” wrote Doug Creutz of TD Cowen in a note to clients Tuesday, calling the WBD statement a “formality” given weeks of reports of Paramount’s offer.
“Ultimately, we believe Paramount remains the most likely to succeed in acquiring WBD,” agreed Robert Fishman and Craig Moffett of MoffettNathanson. “If WBD was always part of the longer-term Skydance acquisition strategy, we expect PSKY to be the most aggressive in pursuing these assets. In addition, we continue to view the odds of a PSKY/WBD deal clearing regulatory review as higher, given the Skydance team’s recent success in closing the Paramount transaction.”
Comcast would face a much tougher road due to its ownership of MSNBC and Saturday Night Live network NBC, both of which have run afoul of President Trump. The company’s DEI policy also elicited a federal investigation.
“Given past commentary against all-things-Comcast from both the White House and the FCC over the past year,” Moffett noted, “a successful Comcast acquisition of almost anything seems nearly unthinkable.”
Jessica Reif Ehrlich of Bank of America was less certain that the prize is Paramount’s for the taking. She nevertheless greeted the news of interest from multiple parties as a plus. She has a “buy” rating on the shares at a $24 price target and continues to see potential in the company’s initial plan to spin off its cable networks from its studio and streaming assets.
“As the company approaches the date of the announced separation (expected April 2026), we believe there will continue to be further recognition of the inherent value in the two new entities,” she wrote in a client note. “Today’s acknowledgement of multiple unsolicited parties indicating interest in the company (for both the entire company and Warner Bros.) should provide a floor for the share price.”
Today’s statement from WBD revealed a nuance in terms of the split. CEO David Zaslav last month put an accelerated timeline for the split of April 2026, earlier than the initial guidance of mid-2026. The latest statement returned the goalpost to the original mid-year point.
Since the April 2022 closing of the $43 billion merger of WarnerMedia and Discovery, investors have been dragged into the muck. The company’s management team, led by CEO David Zaslav, implemented waves of cost cuts, jousted with the creative community, re-branded flagship streamer HBO Max twice, and got pummeled as Wall Street turned sour on legacy TV assets. At several points in 2024, WBD shares slipped below $7 as the company’s massive debt load and linear TV exposure appeared to be insurmountable challenges.
Laurent Yoon of Bernstein Research, summed up the resurgent mood in Burbank in a note titled, “HBO and Chill.” He said WBD at the moment has the upper hand, but it’s a dynamic situation. “Management needs to keep the dialogue open to ensure there’s more than one credible bidder at the table,” he wrote. “There hasn’t been an asset like this on the block in years, and it’s unlikely we’ll see another in the foreseeable future. For anyone looking to bulk up fast, this is it.”
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