By Harshita Mary Varghese and Jaspreet Singh
(Reuters) -Warner Bros Discovery is considering an outright sale following unsolicited interest, the company said Tuesday, in what would be the latest shakeup across legacy media.
Shares of the company rose 10% in morning trading.
Comcast is likely to examine the media firm’s assets, a source told Reuters on Tuesday. Netflix is also among the interested parties, CNBC reported, following earlier reports that Paramount Skydance CEO David Ellison was also in talks to acquire the whole company.
Warner Bros Discovery – home to CNN, HBO Max and the “Harry Potter” franchise – announced plans in June to split into studio-centric and cable-focused units by next year to separate its growing streaming business from its lagging cable network unit.
The board will consider a range of options including its planned separation, a deal for the entire company, or separate transactions for its Warner Bros or Discovery Global businesses, the company said on Tuesday.
It is also considering an alternative separation structure that would enable a merger of Warner Bros and a spin-off of Discovery Global.
SALE COULD RESHAPE MEDIA LANDSCAPE
A sale or a split would be one of the most consequential reshaping moments in the media industry, potentially prompting other legacy media houses to revisit their own structures. Streaming has fundamentally reshaped the media industry, leaving traditional broadcasters with mounting debt, higher content budgets and fragmented viewership.
Any deal for Warner Bros Discovery would give the buyer control of a major studio and a leading streaming service, but also saddle it with the company’s roughly $35 billion debt.
Shares of WBD, which has a market valuation of $45.36 billion, have surged more than 46% since early September, when reports of Paramount’s interest in the company surfaced.
“Paramount is the most likely to purchase the company. For Netflix, a purchase would make more sense following the planned split because the studio would be very valuable to Netflix but the TV networks not as much,” said Emarketer senior analyst Ross Benes.
The company already rejected an initial bid from Paramount because the offer of around $20 per share was too low, Bloomberg News reported earlier this month.
Paramount declined to comment, while Netflix did not immediately respond to Reuters’ request for comment.
Reuters could not immediately verify the CNBC report.
Comcast is in the process of spinning off its NBCUniversal cable channels, including USA Network and CNBC, into a new company called Versant later this year.
“Potential WBD suitors, including Paramount, Comcast, Netflix, Amazon and Apple, could see value in moving sooner rather than later to acquire the entirety of WBD versus waiting to purchase just the streaming and studios assets,” said Seth Shafer, principal analyst at S&P Global Market Intelligence Kagan.
ELLISON FAMILY’S AMBITIONS
Skydance’s advances soon after snapping up Paramount speak to the Ellison family’s voracious appetite to dominate the global media landscape amid a favorable regulatory regime in the United States.
Analysts believe David Ellison’s deep pockets – backed by his father, Oracle co-founder and the world’s second-richest person Larry Ellison – give him the firepower to take the risk.
The elder Ellison’s close ties with U.S. President Donald Trump may also smooth regulatory hurdles and avoid the scrutiny that would usually come with such a merger, analysts say.
(Reporting by Harshita Mary Varghese and Jaspreet Singh in Bengaluru; Editing by Leroy Leo)
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