Warner Bros. Discovery is smack in the eye of the latest media M&A maelstrom — and staffers are bracing for the possibility that they’ll get a new corporate overlord in the near future.
The leading takeover candidate is aspiring Hollywood empire-builder David Ellison, son of one of the world’s wealthiest people. Ellison, fresh off orchestrating Skydance’s merger with Paramount, is now aggressively chasing a much bigger quarry in Warner Bros. Discovery.
This week, WBD chief David Zaslav and the company’s board publicly announced that they’re doing due diligence on in-bound acquisition interest from “multiple parties.” The company didn’t name Paramount or any others that have made M&A overtures. But Ellison has been driving especially hard to win over WBD and Zaslav with a series of escalating offers backed in part by his dad, Larry Ellison (net worth: more than $330 billion).
In three letters to the WBD board, Ellison proffered bids of $19, $22 and $23.50 per share, the last coming Oct. 13, a source with knowledge of the matter says, confirming a New York Times report. That last offer would be worth an eye-popping $93 billion if factoring in WBD’s net debt of nearly $36 billion. (Warner Bros. Discovery shares closed at $21.25 a share on Oct. 23, up 69% since news of Ellison’s interest broke last month.)
Ellison, looking to do some ego-massaging, even gave Zaslav the opportunity to become co-chief executive and co-chairman of a merged Paramount-WBD in his most recent missive. Each bid was rejected by WBD’s board. (Company reps declined to comment.)
Obviously, the Ellisons and their investment partners have a ceiling: They’re not going to go after Warner Bros. Discovery at any price. Their latest $23.50/share proposal is not a best and final offer. Now that WBD’s board has kicked off an M&A review process and is opening its books, the Paramount camp will have an opportunity to come back with a higher (or modified) bid. But it’s understood that Ellison believes he has the pole position among would-be buyers of WBD and is unlikely to go much higher on deal price.
Zaslav, of course, is eager to pit rival suitors against each other to get a maximum dollar figure for WBD, either as a whole or in pieces. “It’s no surprise that the significant value of our portfolio is receiving increased recognition by others in the market,” he said in the company’s statement Tuesday.
Netflix, Amazon and Apple are said to be in the mix as prospective buyers, but likely only for WBD’s studios and streaming businesses. That aligns with Warner Bros. Discovery’s already-underway plan to split into two companies by mid-2026: Warner Bros., housing HBO Max and the studios, and Discovery Global, largely comprising the TV networks. But one senior industry exec tells Variety that for the tech-oriented companies, WBD as a whole — inclusive of TV networks — “is just not core” to their growth strategies.
Netflix co-CEO Ted Sarandos told investors on its Q3 earnings call that the company has “no interest in owning legacy media networks,” pouring cold water on the prospect of a deal for WBD in its entirety. While Sarandos left the door open by saying Netflix can be “choosy” about its M&A targets, he added: “Nothing is a must-have for us to meet our goals that we have for the business.”
In its announcement, WBD said it would consider a sale of the separated Warner Bros. entity to a third party, alongside a spinoff of Discovery Global to shareholders. Meanwhile, there’s been speculation that Sony might make a play for WBD, but sources tell Variety the company is not interested.
Comcast is circling Warner Bros., but it is also unloading most of its cable TV assets into spinoff company Versant, potentially complicating any talks to buy WBD. Plus, analysts say, Trump’s enmity toward CEO Brian Roberts gives the Ellisons — who are palsy with the president — a better shot at getting a deal cleared. Trump, upset about MSNBC’s coverage of him, once called Roberts the “chairman of ‘Concast’” and a “lowlife.”
“Given past commentary against all-things-Comcast from both the White House and the FCC over the past year, a successful Comcast acquisition of almost anything seems nearly unthinkable,” MoffettNathanson principal analyst Craig Moffett said in an Oct. 21 note to clients.
What’s behind Ellison’s desire to marry Paramount with Warner Bros. Discovery? It’s the same trends that have whipped across the media biz for the past several years, says Scott Purdy, media strategy leader for professional services firm KPMG U.S.
Big media companies have seen a decline in their linear TV business, and “industries in decline tend to consolidate,” Purdy says. “The one major factor is scale.” In addition, he says, buyers often want to snap up high-value entertainment franchises and intellectual property — partly to keep them out of the hands of competitors.
A Paramount-WBD megamerger would entail a massive tranche of layoffs, letting the new entity consolidate functions across corporate divisions, studios, TV and streaming. In the meantime, Ellison and his team are expected to begin mass layoffs at Paramount Skydance next week, eliminating around 2,000 jobs in the U.S., with additional cuts internationally.
Ellison, speaking earlier this month at L.A.’s Bloomberg Screentime conference, would not confirm that Paramount Skydance has made a bid for WBD. But he explained why he thinks Paramount needs to bolt on more content-producing engines to achieve sustainable growth in a streaming-centric world. He even cited Zaslav’s comments from a year ago that the industry needs more consolidation.
“I do think there’s a lot of [M&A] options out there in terms of what actually might be actionable in the near future,” Ellison said. “You actually need more content to yield more engagement.”
Now that Warner Bros. Discovery has commenced a formal M&A review process, the question is whether Ellison will come back with an even higher offer — and whether the WBD board believes it’s really the best path forward.
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