Episode summary
Paramount Makes Hostile Bid for Warner Bros. at $30 a Share
Bloomberg Surveillance
· · Hosts: Tom Keene, Paul Sweeney · Guests: Geetha Ranganathan
Summary
Paramount Skydance’s hostile $30-a-share all-cash bid for Warner Bros. Discovery was framed as a cleaner alternative to Netflix’s roughly $27.75 cash-and-stock proposal, which covers only the studios, HBO and streaming. Geetha Ranganathan said the Paramount offer is for the whole company, but on a first pass Netflix still looks slightly better because the remaining TV networks business appears to carry more value than Paramount is assigning it.
The analyst argued that the Paramount proposal may have an edge on certainty. She said the financing looks lined up through the Ellison family, Redbird Capital and large lenders, while the earlier idea of Middle East capital would have raised extra regulatory complications. That, in her view, makes Paramount’s pitch easier to sell as a fast-track path compared with the antitrust and political risks around Netflix.
She also said the battle could force Netflix to lift its bid if it wants to win. On valuation, she noted that the combined Warner Bros. Discovery assets look closer to $32 a share, and that Hollywood may prefer Paramount as the “known devil” because it is more committed to movie and TV output. On antitrust, she said a combined Paramount-Warner studio would likely stay below the usual 35% trigger point.
Key takeaways
- Geetha Ranganathan said Paramount’s $30 cash bid covers Warner Bros. Discovery’s entire company, while Netflix’s offer is mostly for studios, HBO and streaming.
- She said Netflix’s proposal still looks slightly superior on a first look because the TV networks business may be worth more than Paramount is implying.
- Ranganathan argued Paramount has a cleaner financing and regulatory story because the deal is backed by the Ellison family, Redbird Capital and major lenders.
- She said a 25% to 30% domestic box office share for a combined Paramount-Warner studio appears below the usual 35% antitrust trigger point.
- Ranganathan said Netflix may need to raise its offer to $30 a share or higher if the bidding war intensifies.
Notable quotes
“Paramount had actually made the offer for a $30 cash bid for all of Warner Brothers Discovery”
“the Netflix offer is actually superior because you do have a $4 value on the TV networks”
“there is much more certainty that this deal actually goes through”
“What I see here, Paul, is a word hostile”
“I think the the deals are pretty comparable, as I was just mentioning to Tom”
How the episode opens
We knew they were not going to go away easily. You know, there was so much drama last week, even as we knew that Netflix was kind of closing in on the Warner Brothers deal. But just from, you know, first take.
So basically, even last week, we know that as Netflix kind of made its offer at just just a little bit shy of $28 per share for the studio. Paramount had actually made the offer for a $30 cash bid for all of Warner Brothers Discovery. So the thing is, when you kind of compare the two offers here, the Netflix offer is still superior because it's only for part of the company, The remaining part of the company, which is the TV networks business, value it at about $4 a share.
So you put the value of the total Warner Brothers Discovery assets, the entire portfolio at $32. So right off the bat, slightly lower than what Netflix is offering. Of course, I think the way that Paramount Skydance's would frame this is there is a lot less regulatory risk and there is much more certainty that this deal actually goes through.
Paul Sweeney with Geeta Raghunath and Paul, I'm just going to say within the 45 headlines, the the enterprise value numbers are 82 billion versus 108 billion with this will offer up 20 billion ish. I see. I nailed that.
Exactly. That's why they asked me to leave. I continue to write it.
This as you talk to institutional investors out there, is there a preference for Warner Brothers, Discovery shareholders? You know, which deal do they would they prefer here? I mean, this one, the good news about this one, it is 100% cash versus the Netflix, which is mostly cash, but there is an equity component.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- media mergers
- hostile takeover
- antitrust review
- streaming competition
- hollywood content strategy
Companies and tickers mentioned
- NFLX
- DIS
- AMZN
- CMCSA
- GOOGL
- GOOG
- Paramount Skydance Corp.
- Warner Bros. Discovery Inc.
- Netflix Inc.
- Walt Disney Co.
- Amazon.com Inc.
- Comcast Corp.
- Alphabet Inc.
Watch the episode
Watch “Paramount Makes Hostile Bid for Warner Bros. at $30 a Share” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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