Paramount To Acquire Warner Bros. Discovery? It Appears So.
The Doors’ front man Jim Morrison once sang “when the music’s over, turn out the lights”. The Ellison family’s Paramount Skydance (PSKY), backed by Oracle (ORCL) co-founder Larry Ellison’s wealth, can turn off the lights of its bidding competitors for Warner Bros. Discovery (WBD), if it wishes to do so.
The Ellison’s (Larry, son David, daughter Megan), simply will go further in terms of what they are willing to pay to acquire WBD than will the bidding competition: Netflix (NFLX) and Comcast (CMCSA). Larry will overpay if that is what it takes to win a bid. Oracle has acquired countless companies since I first started tracking the company back in 2003. Ellison Sr. will not lose this bid if son David truly wants to acquire WBD.
Further - and importantly - PSKY is the only bidder that wants ALL of WBD. Netflix only wants WBD’s studio/streaming business, it has no use for WBD’s linear business (a declining business that is in permanent decline). Likewise, Comcast has no use for WBD’s linear business. Comcast owns a sub-scale streaming business (Peacock) and could benefit greatly from owning WBD’s streaming business, but the linear business would only be a drag on Comcast’s financials. Despite Comcast’s Brian Roberts’ longtime personal ties to WBD’s John Malone, those ties won’t be enough to get a deal done. Roberts would need to find a deep-pocketed partner to win the day. I don’t know who that would be (Microsoft?). Finding a partner at this stage of the deal would only add complexity and feels as if it would be far too late in the process.
WBD architect Dr. John Malone - whilst creative - is nothing if not practical, which has helped drive his brilliant track record. Thus, my guess is Malone would much prefer (as would any logical seller), to sell WBD in its entirety rather than a portion of the company. The fact that PSKY wants all of WBD is a gift to WBD, assuming the floated total purchase consideration is reasonable.
Conclusion: the rumor is that PSKY is willing to pay $27/share for WBD. Logic would suggest that $27 will be enough to get the deal done.