S&P Global Media: Speed Crucial in WBD Acquisition Battle

The media landscape is undergoing rapid changes, posing challenges for mergers and acquisitions (M&A). Naveen Sarma, Managing Director at S&P Global, emphasized the importance of speed in these transactions during a recent UBS media conference in New York. He indicated that delays can result in missed opportunities as market dynamics evolve.

S&P Global Insights on M&A in Media

Sarma explained that many previous M&A deals faltered due to the swift pace of change in the entertainment ecosystem. Waiting for extended periods can leave companies unable to effectively adapt their strategies. This insight came as the discussion centered on Warner Bros. Discovery’s (WBD) ongoing acquisition battle.

Warner Bros. Discovery’s Sales Strategy

In October, WBD announced its intention to sell under pressure. Recently, WBD agreed to a deal with Netflix, valuing the transaction at $27.75 in cash and stock. Paramount, having made six unsuccessful bids for WBD, launched a hostile tender offer earlier this week, proposing $30 in cash for the entire company. WBD must respond within ten days.

Competition Between Netflix and Paramount

• Netflix has greater financial flexibility and may increase its bid if necessary.
• Paramount, led by David Ellison, has limited capacity but is seeking support from family resources.
• The equity backing Paramount’s bid involves Middle Eastern sovereign wealth funds and Jared Kushner’s Affinity Partners.

Sarma pointed out that the risk factors differ for the companies involved. Netflix is in a strong position to wait and assess, while Paramount could face challenges due to the decline in traditional television viewership.

Regulatory Concerns and Bid Deadlines

The Department of Justice will review the acquisition, and Paramount’s leadership is actively promoting their bid. David Ellison is rallying investors to tender their shares by a January 8 deadline, which can be extended if needed.

Ellison argues that the potential Netflix and HBO Max merger raises antitrust concerns. However, Netflix counters that streaming is a competitive market with many players, including platforms such as YouTube and TikTok.

Future of the Acquisition Battle

• Netflix executives, Ted Sarandos and Greg Peters, expressed confidence in their offer during the UBS event.
• Industry experts foresee potential complications in the acquisition process, including increased bids and possible legal battles.

As the situation unfolds, the strategic advantages and risks associated with both offers will likely dominate discussions in Wall Street and Hollywood. Sarma’s insights suggest that quick decision-making is crucial in the fast-paced media environment.