Warner Bros Discovery has turned down a nearly $60 billion all-cash offer from Paramount Skydance, as the entertainment giant begins exploring other strategic options, including a potential split of its major businesses.
Reuters first reported that the Warner Bros Discovery board rejected the proposal, valued at about $24 per share. The bid covered the company’s extensive assets, including Warner Bros film and television studios, CNN, HBO Max, and a portfolio of cable channels. Shares of Warner Bros Discovery jumped 11% on Tuesday following the news.
In a statement released Tuesday, Warner Bros Discovery confirmed that it would evaluate a range of possibilities, including the previously announced plan to separate its studio and cable units, a full or partial sale, or alternative restructuring arrangements.
The company said it is also considering a structure that could see Warner Bros merge with another buyer while spinning off its Discovery Global business into an independent entity.
Read Also: Paul Biya: Declared Provisional Winner In Cameroon Elections
According to Reuters and CNBC, other major players such as Comcast, Netflix, and Amazon are assessing Warner Bros Discovery’s assets. Comcast, which is currently spinning off its NBCUniversal cable division into a new company called Versant, is seen as a likely contender.
And while Paramount Skydance remains the most probable buyer, Netflix might be interested in acquiring the studio division after the planned split, given its vast content library and global production potential.
“Paramount is the most likely to purchase the company,” said eMarketer senior analyst Ross Benes. “For Netflix, a purchase would make more sense following the split because the studio would be very valuable, but the TV networks not as much.”
Two people familiar with the talks said Warner Bros Discovery had earlier rejected an initial Paramount offer of about $20 per share for being too low.
Bank of America research analyst Jessica Reif Ehrlich estimated the company’s fair value closer to $30 per share, citing its “wealth of premium IP” including Harry Potter, DC Comics, Game of Thrones, and Lord of the Rings.
“Given its strong library and brands, Warner Bros remains an extremely attractive acquisition target,” Ehrlich wrote in an investor note.
The rejected offer shows the ambitions of David Ellison, CEO of Paramount Skydance, whose recent acquisition of Paramount Global has positioned him as a major force in Hollywood. Backed by his father Larry Ellison, Oracle’s billionaire co-founder, the younger Ellison has sought to build a global media powerhouse under favourable US regulatory conditions.
