Report: Warner Bros. Discovery to Announce Sale or Split by Christmas

Will Paramount acquire Warner Bros. Discovery? Or will it be Comcast or Netflix? Will the company remain independent and follow through with its plan to split off the prized assets from the dying linear channels? According to a report by CNBC, we should know the answer by Christmas.

Paramount’s most recent offer for WBD was $23.50 per share. WBD CEO David Zaslav is said to be aiming for $30. On the day before news broke of Paramount’s interest, shares were trading for just $12.54.

An Oct. 13 letter from Paramount Skydance CEO David Ellison to the WBD board tried to sway the company from splitting itself up.

“We understand that you and your leadership team are optimistic about potential value creation from your planned break-up. However, a more objective analysis yields results meaningfully below the consideration to WBD shareholders in our proposal. We have analyzed the value of the planned break-up to WBD shareholders at the end of 2028 based on optimistic assumptions, including:

• Warner Bros. outperforming consensus EBITDA by ~$500 million (10%) and trading at the same multiple as Disney, despite the iconic global company that Disney represents across its businesses
• Discovery Global achieving consensus EBITDA, despite meaningful headwinds, and trading at the media of analyst research “sum-of-the-parts” multiples for the business
• An illustrative 25-40% M&A premium applied to Warner Bros.

Based on these assumptions, the planned break-up would generate a present value to WBD shareholders of less than $15 per share on a trading basis, or ~$18 to ~$20 per share including a robust, yet highly uncertain, M&A premium for Warner Bros.”

Yes, the Warner Bros. library and IP represent one of the crown jewels of the entertainment industry. But in 2021, that jewel was set in the gawdy plastic tiara of the Discovery networks. To be clear, the same network that created “The Wire” and “The Sopranos” doesn’t belong in the same family as the backwoods cousin that belched out “Here Comes Honey Boo Boo” and “Dr. Pimple Popper.”

David Zaslav’s reality show sleaze is disposable TV, and Ellison would be wise to jettison those networks. It’s unclear why he wants the full linear package when he already has several zombie channels (MTV, Comedy Central, VH1) that he needs to sort out.

The nefarious read of this is that Ellison wants to get his hands on WBD-owned CNN. Ellison plucked a right-wing saboteur named Bari Weiss to run the CBS news division. The most recent edition of “60 Minutes” featured a softball interview with President Trump where he celebrated Ellison’s ownership and bragged about having extorted a $16 million payoff from Paramount to grease the tracks for its merger with Skydance.

And like any hard-hitting journalism show, the Weiss-approved version of “60 Minutes” now features stories like how the Guinness Book of World Records verifies the world’s largest gathering of Smurfs.

Weiss is dismantling CBS News intentionally. It will get worse.

Although CNN has shown a lot of right-wing bias in recent years, it would likely morph into a full-blown Fox News clone if Weiss gets to run the show. She already approached Fox anchor Bret Baier for the top CBS anchor gig.

David Ellison barely has his feet wet as the head of a monster media company. But he’s got daddy’s money (Oracle founder Larry Ellison) and an urge to swallow a competitor. Since taking over, Ellison has already chased off Taylor Sheridan, creator of all of the most popular Paramount+ shows. Imagine what would happen to HBO under his leadership.

To be fair, Warner Bros. Discovery CEO is an incompetent boob, but he has stayed out of the way of HBO leader Casey Bloys. We’re still getting quality content. Ellison could be willing to cross that red line.

Ultimately, viewers would be best served by having Warner Bros. and HBO run by an independent company. Folding it into Paramount would result in fewer theatrical movies and a questionable creative environment.

Whatever happens, it seems we’ll find out in the next 50 days.