Warner Bros. Discovery Inc WBD

Chip Douglass is an anti semetic moron. Please block him.

$WBD $PSKY NFLX offers $27.75 for S&S while PSKY offers $30 for whole company (S&S and Discovery Global). Since elder Ellison did not pay $2.8 billion ( $1.66/share) break-up fee, the all-cash $30 - $1.66 =$28.34 will be what WBD will be getting, and the difference between NFLX and PSKY is $0.59 only ($28.33 - $27.75). That means Ellison wants to buy Discovery Global for $0.59 only. To WBD, that is not a Superior offer.

Reportedly tomorrow WBD will recommend to shareholders to stay the course with Netflix. Paramount will very very likely increase their bid because they desperately need to buy WBD. Who knows if NFLX will enhance their bid at that point.

… happens going forward, they will have been paid.

Thank you for this, yes a good read and some good points and perspective. But the author has the wrong price that Netflix is paying. Shareholders will also receive the discovery spin off shares so total consideration is actually: $27.75 plus $3= $30.75. BUT shareholders will receive mostly cash so they don’t really care what happens going forward, they were paid!

The only thing Trump can do is to recommend that the DOJ sues to block the Netflix purchase. Then it’s up to the courts. Not up to Trump. Netflix has a tremendous legal team. It will be a good old fashioned battle. I’m expecting a paramount last ditch hostile bid direct to shareholders next week. And then it’s up to the shareholders - depending on Paramounts price this may actually cause the final price paid to wbd to go above the current bid. Great to be a wbd shareholder!

If the government sues to block Netflix from buying wbd then it will be up to the court, NOT Trump. Netflix has hired a robust legal team to defend the deal. Assuming the deal closes, then wbd shareholders will receive cash-stock AND will still own shares of the linear cable entity not being acquired by Netflix. Reportedly (cnbc) worth in the $4/sh range. So all in, this deal yields approx $27.75 + 4=$31.75/sh. Likely a floor is now in place. Additionally Paramount could mount a hostile bid soon acting as a catalyst for another leg up.

Paramount would clearly be the highest likelihood deal to come to fruition. But we don’t know what the bids are. If Paramount is sticking close to their most recent $23.50 bid, say $24.50, and NFLX is at say $28, then the board has to pursue the best all around deal. NFLX isn’t stupid so they must have comfort they can win in court. Paramount seems desperate at this point with their most recent letter to the wbd board indirectly threatening litigation or proxy fight. I would think that this doesn’t sit well with Zaslav and made Paramounts position worse. This is going to be very fluid but not likely that the end price drops at all durning this process, and likely will trade closer and closer to the final bid price less some uncertainty slippage but not likely significant.

Hard to discuss which of the three bids is best when we don’t know what the purchase prices are!! If the chosen bid is only for the streaming and studio components, then the buyer will have to wait for WBD to complete the separation. Then WBD shareholders will likely own shares in the 2 new entities; a. The cable/TV stations (Discovery/CNN/TNT etc) and b. The streaming and movie production companies (HBO/Max and WB Studios). Then shares of the streaming/studio newco will be tendered by the buyer and shareholders of newco will receive cash/stock equating to the purchase price. And shareholders of the unsold WBD newco can decide then to hold or sell those shares. This entity likely won’t have a very solid looking balance sheet but will be a big free cash flow generator and can gradually pay down debt. It will likely pay an attractive dividend.

Bids were only due yesterday. WBD has 3 legitimate offers to evaluate. Obviously lots to consider, not only the economics but also the likelihood of closing. This won’t likely occur quickly. But as I said last week the share price of WBD likely continues to melt up as a sale continues to become more and more real. Whether a sale of a portion or entire company, the whisper of close to $30 also continues to look more and more real. Very happy to be a share holder.