SALE COULD RESHAPE MEDIA LANDSCAPE
A sale or breakup would mark one of the most significant restructurings in the entertainment industry in years, potentially prompting other legacy media firms to revisit their own business models. Streaming competition has left traditional broadcasters burdened with debt, rising content costs and fragmented audiences.
Any deal for Warner Bros Discovery would give the buyer control of a major Hollywood studio and a leading streaming platform but also inherit roughly US$35 billion in debt.
The company’s shares, now valued at about US$45 billion, have risen more than 46 per cent since early September, when reports first surfaced of Paramount’s interest.
VALUATION AND SUITOR STRATEGIES
“Paramount is the most likely to purchase the company. For Netflix, a purchase would make more sense after 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.
Bank of America research analyst Jessica Reif Ehrlich estimated the company’s total value at about US$30 a share, noting that Warner Bros Discovery has not publicly commented on the offers.
“Given the company’s wealth of premium IP — Harry Potter, DC, Lord of the Rings, Game of Thrones — we continue to believe Warner Bros is an extremely attractive potential acquisition target,” she said in an investor note.
Comcast, meanwhile, is preparing to spin off its NBC Universal cable channels, including CNBC and USA Network, into a new company called Versant later this year.
Seth Shafer, a principal analyst at S&P Global Market Intelligence Kagan, said potential buyers 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 studio assets.”