Episode summary
Warner Bros. Urges Investors to Reject Paramount Bid | Bloomberg Intelligence
Bloomberg Intelligence
· · Hosts: Paul Sweeney, Scarlet Fu · Guests: Geetha Ranganathan, George Ferguson, Drew Reading, Jonathan Palmer
Summary
Warner Bros. Discovery urged shareholders to reject Paramount Skydance’s hostile bid and back its original Netflix agreement instead, and Geetha Ranganathan said Paramount likely needs a higher price, not just better financing, to reopen talks. She argued Warner Bros. sees the Paramount offer as inadequate, inferior to Netflix, and valuing its TV network business too low; she put the bid level needed to get the board back to the table at about $32.50-$35 a share. She also noted Paramount’s withdrawal of Jared Kushner’s Affinity Partners from financing improves optics, while Comcast’s Versant cable spinout suggests the global networks business may be worth more than Paramount’s implied 4.5x EV/EBITDA multiple.
George Ferguson said revived merger talks between Spirit Aviation Holdings and Frontier Group Holdings could make strategic sense because the carriers have similar low-cost models and a combined airline could better withstand weak economy-flyer demand. He did not expect major regulatory problems and said the deal could preserve jobs if Spirit finds a partner quickly.
Drew Reading said Lennar’s quarterly order outlook disappointed because affordability, consumer confidence and a weakening labor market are still holding back demand. Jonathan Palmer said Medline’s $6.26 billion IPO was heavily oversubscribed and reflects a stable business with a mix of branded products and distribution, even with tariff and debt-paydown considerations.
Key takeaways
- Geetha Ranganathan said Paramount likely needs a materially higher bid, around $32.50-$35 a share, to get Warner Bros. Discovery’s board back to the table.
- Ranganathan said Warner Bros. Discovery views Paramount’s offer as inadequate and inferior to Netflix, despite the new financing backstop.
- George Ferguson said a Spirit-Frontier combination could be viable because the two low-cost carriers have similar models and enough scale to compete better.
- Drew Reading said Lennar’s guidance was weak on orders, closings and margins, signaling persistent affordability and confidence problems in housing.
- Jonathan Palmer said Medline’s IPO was oversubscribed and backed by cornerstone investors, supporting a multi-year deleveraging and growth story.
Notable quotes
“I do think that they need to up the price”
“they also called the proposal inadequate inferior to Netflix and illusory”
“we come up with at least a $3250 um uh increased bid that Paramount would need to present”
“I think if you put the two airplane airlines together now, you'd have an airline that have something like 350 seats”
“we think that consensus needs to come down pretty sharply here”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Paramount updating its bid for Warner Brothers, but it did not increase its price. Yeah,
It's sticking to that $30 a share offer for Warner Brothers, but what they did do is offer some more commitment on financing um $41 billion new equity backs stop. Keith Rangathan is Bloomberg intelligence analyst on US media and she's here with us now. Does this move the needle at all here, Gita, for uh Paramount to basically talk about the the financing and how it's going to backs stop it by the Ellison family, but not change the actual price.
Yeah. Um not not completely sure, Scarlet. I I do think that they need to up the price.
uh you know Warner Brothers Discovery of course the main concern that they raised was financing but they also called the proposal inadequate inferior to Netflix and illusory. Uh the inadequate really stems from the fact that uh they feel that Paramount Sky Dance is undervaluing their TV network business pretty substantially. Plus they also talk about uh the extra almost $2 a share that they would need from Paramount if they were to walk away from a Netflix.
This is for uh this is to cover both the termination fee that Warner Brothers Discovery would own uh would owe Netflix as well as you know some of the financing costs. So there's all of that you know you kind of put all of that math together and we come up with at least a $3250 um uh increased bid that Paramount would need to present in order to kind of get the Warner Brothers Discovery Board back to the table.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- media mergers
- hostile takeover
- airline distress deals
- homebuilding earnings
- ipo pricing
Companies and tickers mentioned
- NFLX
- ULCC
- LEN
- Warner Bros. Discovery
- Paramount Skydance Corp.
- Netflix
- Spirit Aviation Holdings
- Frontier Group Holdings
- Lennar
- Medline
Watch the episode
Watch “Warner Bros. Urges Investors to Reject Paramount Bid | Bloomberg Intelligence” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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