Kevin Mayer Predicts Paramount-Netflix Bidding Battle for Warner Bros. Discovery

Kevin Mayer, the former Disney executive and CEO of TikTok, anticipates a heightened bidding war for Warner Bros. Discovery (WBD) between Paramount and Netflix. Speaking at the UBS media conference, Mayer predicted that the Ellison family, known for their aggressive strategies, would escalate their offer in order to attract shareholders from Netflix. He noted, “There’s nothing but good news” for WBD and suggested that the offer could increase by an additional five to ten billion dollars.

Paramount’s Recent Moves

Paramount has made multiple attempts to acquire WBD, submitting six offers, with the latest being a cash bid of $30 per share. This valued WBD at approximately $108 billion. However, these offers have been consistently rejected as WBD, led by CEO David Zaslav, has entered into a deal with Netflix valued at $27.75 per share, equating to around $82.7 billion.

Recently, Paramount has adopted a more aggressive approach, making a hostile tender offer directly to shareholders. WBD is currently in the process of evaluating this offer.

Market Insights from Mayer

Mayer expressed skepticism that Paramount’s recycled bid—initially proposed to WBD management—would suffice. He characterized it as merely “a first step” and anticipated “fireworks” in the negotiations. Having previously collaborated with Disney CEO Bob Iger on significant acquisitions, including the purchase of 21st Century Fox in 2019, Mayer highlighted the complexities involved in such bidding wars.

Key Takeaways from the Disney-Fox Acquisition

The Disney-Fox acquisition serves as a historical reference. Disney had an offer on the table for $28 per share when Comcast disrupted the process with a $35 proposal. Eventually, Disney raised its bid to $38 per share to secure the deal, adding $19 billion to the overall cost. Mayer reflected, “It was still a good deal,” but the competitive nature of negotiations altered its value.

The Future of Streaming

Mayer pointed out the compelling rationale for both Paramount and Netflix in acquiring Warner Bros. Discovery, especially as the media industry evolves. He suggested that Netflix’s primary interest lies in Warner’s intellectual property rather than HBO Max itself. Mayer questioned how regulators would interpret streaming market dynamics and whether Netflix might be open to concessions regarding its streaming platform to facilitate the acquisition.

• Current Offers:
  • Paramount: $30 per share (total enterprise value: $108 billion)
  • Netflix: $27.75 per share (total enterprise value: $82.7 billion)
• Historical Context:
  • Disney-Fox Acquisition: Initial offer at $28 per share, eventually reached $38 per share.
  • Comcast’s counteroffer raised complexities in negotiations.

Mayer’s insights underline the tension surrounding the acquisition process, suggesting that both Paramount and Netflix must carefully evaluate their strategies moving forward. The competitive landscape continues to shift as these media giants vie for valuable assets in the entertainment sector.