Sale Considered

Warner Bros. Discovery announced it would review potential sale options after receiving interest from multiple buyers.

Context

Warner Bros. Discovery was formed just three years ago through a merger between Discovery and WarnerMedia, which had been owned by AT&T. The company owns HBO, CNN, Warner Bros. studios, and cable networks including TNT, TBS, Discovery Channel, and Food Network. The merger left the company heavily burdened with debt, and it has been losing money since the deal closed.

Strategic Review

The company's board said on Tuesday that it would evaluate a “broad range of strategic options” after receiving interest from multiple parties.

CEO David Zaslav stated the company initiated “a comprehensive review of strategic alternatives to identify the best path forward to unlock the full value of our assets.” The review could result in a sale of the entire company, separate deals for different divisions, or the company proceeding with its previously announced plan to split into two businesses by mid-2026.

Potential Buyers

Paramount recently made at least one offer for the entire company, which was rejected as too low. Multiple reports indicated Paramount made bids below $30 per share, all of which Warner Bros. turned down. Warner’s shares were trading at $20.33 at market close Tuesday, giving the company a roughly $50B market value.

The most recent Paramount bid, which reportedly came in at around $24 a share, was at least the third attempt by Paramount chairman David Ellison, the son of tech billionaire Larry Ellison who only just finalized his Paramount purchase in August, to acquire Warner. Ellison is reportedly considering a hostile takeover of the media giant and is imminently preparing a fourth round of bidding, according to the New York Post.

If Ellison were to successfully acquire Warner Bros., he would be the owner of two of the largest news outlets in the US in CBS and CNN. 

Netflix and Comcast have also expressed interest in acquiring parts of the company, particularly the movie and TV studios. However, some potential buyers have publicly downplayed their interest, with Netflix co-CEO Greg Peters saying his company comes from “a deep heritage of being builders rather than buyers.”

Stakes

Warner Bros. Discovery had previously announced plans to split into two companies early next year. One would include its streaming service HBO Max, movie and TV studios, and HBO, while the other would house its cable networks. The company's leadership believes separating the faster-growing streaming business from declining cable networks would unlock value for shareholders. Any sale would dramatically reshape Hollywood by potentially reducing the number of major studios and consolidating streaming services. The company's stock jumped 9% following the announcement, and there is no set timeline for completing the strategic review.