Paramount Skydance Favorite for WBD but Don’t Rule Out a Saudi Bid
The fate of Warner Bros. Discovery will be decided by bidding war after bosses put the entire company, including its streaming services, legendary studios and revered TV drama division up for sale.
The company is being valued around $60 billion.
Three likely outcomes of a WBD sale
With Amazon, Apple, and Netflix along with Comcast and Paramount Skydance reportedly signing NDAs to begin the next phase of diligence, there are at least three likely outcomes whoever comes out on top.
One, transparently, is that (should a merger/acquisition be greenlit by the White House) filmed entertainment will undergo further consolidation. A sale of one of Hollywood’s iconic brands may be a brute force route to it but consumers are widely believed to desire fewer apps and a more cohesive package to get the content they want.
The second outcome follows the first. Having swallowed $60 billion the buyer is going to want to recoup the investment and that means consumers should be prepared for further price hikes.
The third probability is that the buyer will want to fold new content libraries into its own streaming service. Premium brand HBO might keep its own badge but seems likely to be corralled into a section of a larger service in the way that Disney+ presents content from Marvel, Pixel or National Geographic.
“Financially, it makes sense to not maintain development staff for separate apps,” Omdia media and entertainment analyst Paul Erickson told Fast Company. “It would be better, long term, to merge them together. If not merging the brand, at least functionally merging [the services] within a single experience, a single app.”
Who needs IP most? The Saudis
Sony has apparently ruled itself out of a bid so why not throw another spanner into the mix: Given that gaming giant Electronic Arts just went to the Saudi Arabian state in an all cash $55 billion purchase what is to stop an even bigger slice of US entertainment from becoming property of the KSA?
Profitability is not necessarily the first priority of the cash rich Saudis who want to build out their own capacity for movie making and make no bones about wanting a bigger stake in global sports and entertainment.
Only this week at an event in Riyadh the Saudi Film Commission was emphasising the remarkable momentum driving the Kingdom’s film industry, “that brings together filmmakers, policymakers, legislative bodies and training institutions to collectively address challenges and explore new opportunities.”
The KSA could easily outbid rivals were money the sole determinate of, in the words of WBD board chair Samuel Di Piazza, “the best value for shareholders.”
Nor would the White House necessarily have qualms about losing another jewel in the USA’s cultural heritage. After all, the EA sale was backed by Jared Kushner’s private equity firm Affinity.
If you’re looking for metaphors look no further than December 2026 and the release of Warner Bros’ Dune: Part Three, the final part of Denis Villeneuve’s environmental apocalypse odds on to sweep all comers that awards season.
Divorce and remarriage
WBD was already planned to be split into two by mid-2026 with the entity housing cable TV networks and channels including CNN and TNT Sports being sold while shareholders retained the HBO streaming, film archive and production assets. This division remains on track according to WBD in a statement last week, but due to ‘unsolicited’ interest from multiple parties other options are being tabled.
These include selling the entire company or separate transactions for the Warner Bros. and/or Discovery Global businesses.
“It's no surprise that the significant value of our portfolio is receiving increased recognition by others in the market,” said David Zaslav, President and CEO of WBD. “After receiving interest from multiple parties, we have initiated a comprehensive review of strategic alternatives to identify the best path forward to unlock the full value of our assets.”
WBD said it will also consider an alternative structure that would enable a merger of Warner Bros. and spin-off of Discovery Global to its shareholders.
Paramount Skydance Corp is considered the most likely suitor and not least because according to some reports the merger would have President Trump’s blessing.
With CBS News under new editorial scrutiny from CEO David Ellison and his new hire Bari Weiss, the fate of CNN – considered by this administration as another left leaning station - would be under question.
The same politics are deemed a negative for Comcast’s prospects given its ownership of Trump target NBCU. "[T]he real issue here is that Comcast is badly disfavored by the current administration,” MoffettNathanson analyst Craig Moffett explained. “Given past commentary against all-things-Comcast from both the White House and the FCC over the past year, a successful Comcast acquisition of almost anything seems nearly unthinkable.”
TD Cowen analyst Doug Creutz, told The Hollywood Reporter that a transaction with Paramount Skydance is “reasonably likely” while a pair of Benchmark analysts told the same paper that “this prospective combination offers the best strategic value in tandem with high likelihood for regulatory approval.”
MoffettNathanson analyst Robert Fishman suggested to Light Reading that Paramount Skydance “remains the most likely to succeed in acquiring WBD,” and is expected "to be the most aggressive in pursuing these assets.”
Indeed, the New York Times reported a letter from Ellison to the WBD board, which offered to make Zaslav, co-CEO of the combined entity and claimed Paramount would be the most natural fit for the HBO owner and allow it to compete with rivals.
A WBD-Paramount would certainly have scale plus a titanic catalogue to compete with Netflix, uniting the 80 million Paramount+ subscribers with the 130 million worldwide of HBO.
For the streamers, Amazon, Apple and Netflix there are also upsides in owning a vast content haul and access to millions more subscribers but that’s where their interest ends.
Netflix needs IP – but not that badly
“We have no interest in owning legacy media networks, so there’s no change there,” Netflix co-CEO Ted Sarandos told investors in an earnings call last week. “We have a great business. We’re predominantly focused on growing organically. We can be choosy.”
Analysts have cooled on the prospect of a Netflix move without ruling it out either. The main reason seems to be Netflix’ more circumspect attitude to huge investment though it would be keen on WBD’s IP if it can wrest that away for a decent price.
“It is not clear whether Netflix would be best served by the IP such a purchase would provide,” cautioned Enders Analysis.
More titles for Amazon
Similar issues dog Amazon. It has already onboarded MGM and the Bond franchise and there would be synergies to putting WB’s Harry Potter film series adjacent to Amazon’s in-the-works TV series of the same although fans are voicing horror at the prospect of the DC Universe given a Lord of the Rings-style Bezos make-over.
Apple has an eye for sports
Apple has so far built content organically, favoring quality over quantity, while amassing select long term live rights, notably a 10-year pact to stream MLB and the exclusive US rights to Formula 1 from 2026. AppleTV drama like Severance, Ted Lasso and Slow Horses have won particular acclaim and one could see HBO series like Game of Thrones, White Lotus and Succession enhancing the collection.
Market research outfit Antenna believes that 21% of US HBO subscribers also pay for AppleTV, reports Apple Insider, adding, “It's clear that AppleTV subscribers want to watch HBO content, so bringing it in-house makes plenty of sense.”
Apple services chief Eddy Cue was right on message when he told "The Town" podcast, “I never say no to anything in the future, but it's not our approach. We like building things, we like doing things ourselves and creating them. We think that that's how we can really stand out and do unique things.”
No deadline or definitive timetable is set for completion of the review process.
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