Warner Bros. Discovery’s future took another turn this week amid news that NBCUniversal’s parent company, Comcast, is exploring a potential bid for parts of the company, a move that could shake up Hollywood’s studio and streaming landscape if it goes ahead.
The potential deal is yet another sign of the times, where media conglomerates are teaming up to strengthen their positions after disruption from digital platforms and streaming services. Who can forget the Disney-Fox merger in 2019? More recently, Skydance completed its $8.4 billion buyout of Paramount.
As for Warner Bros., the company – formerly known as Time Warner and changed to WarnerMedia – was acquired by AT&T back in 2018 for $85 billion, combining its distribution network with content from HBO, Warner Bros., and CNN.
But the 2018 mega-merger didn’t deliver the synergy AT&T hoped for, and with mounting debt and strategic clashes, WarnerMedia and Discovery merged in 2022. Now, just a few years later, the company again finds itself at the center of potential takeover talks.
Comcast considers Warner Bros. streaming and studio businesses
On November 6, Reuters reported that Comcast, the parent company of NBCUniversal, has hired Goldman Sachs and Morgan Stanley to evaluate an offer for Warner Bros. Discovery’s studio and streaming businesses.
Sources told the outlet that Comcast has also been granted access to the firm’s financial “data room,” indicating a serious look under the hood. Its decision to acquire just the streaming and studio side of the WDB empire would make sense, limiting overlap with NBCU’s cable footprint.
Reuters also reported that spokespeople for Comcast, Warner Bros Discovery, Goldman Sachs, and Morgan Stanley declined to comment on the situation.
If this deal were to go ahead, the implications for TV and movies would be huge. Warner Bros., Discovery’s prized IP, could end up under the same roof as Universal Pictures and Peacock.
That could mean DCU movies like Superman or The Batman 2 becoming Universal-distributed films, with their streaming home shifting from HBO Max to Peacock or a combined platform.
On the TV side, acclaimed HBO series such as House of the Dragon, The Last of Us, and Euphoria could find themselves sharing a platform with NBC favorites like The Office and Saturday Night Live.
The one reason analysts might be skeptical is due to regulatory approval. Any deal of this scale would almost certainly face FCC scrutiny, and political friction could prove an obstacle.
Donald Trump has publicly criticized Comcast CEO Brian Roberts, while FCC chairman Brendan Carr made threats to take away its federal license, slamming its diversity, equity, and inclusion (DEI) policies and the Jimmy Kimmel controversy.
Trump has repeatedly accused NBC and its parent company of biased coverage, which could make securing approval from a future Trump-led administration significantly more complicated.
Paramount Skydance’s $60 billion offer rejected
Prior to the Comcast news, WBD rejected multiple bids from Paramount Skydance, the most recent being an 80% cash offer of nearly $24 per share (just under $60 billion) for a full takeover.
According to CNBC, WBD is currently working out whether to sell the full company, split it in two, or simply sell some assets. But the word is that Paramount Skydance has sent multiple letters explaining why its buyout offer would bring more value to shareholders.
The outlet stated that negotiations could turn “aggressive” if Warner Bros. Discovery chooses other options. However, this is in no way personal – essentially, WBD believes it can fetch a higher valuation or unlock more value by splitting itself up rather than selling outright.
Paramount’s bid reportedly undervalued the company and would have merged two debt-heavy media giants still trying to steady their respective streaming platforms.
Perhaps the biggest news (at least for TV and movie fans) is that Netflix is also reportedly considering a bid for WBD’s streaming and studio arms.
Last month, sources told Reuters that Netflix is actively exploring a bid, retaining a financial advisor and gaining access to financial information.
Why is that big? Because the world’s largest streaming service would gain access to HBO’s prestige TV content, as well as potentially being the official streaming home of DCU movies and shows.
It’s all up in the air right now, with big tech firms like Apple and Amazon also showing interest in purchasing parts of the media giant – but there might not be long to find out what comes next.
CNBC spoke with insiders, who stated WBD is planning to publicly announce its plans in mid-December.
Why is Warner Bros. Discovery up for sale?
Ultimately, much like other media companies, WBD is struggling financially. The firm still has a significant debt load from its 2022 merger, but it also faces challenges around streaming profitability, declining ad revenue, and fierce competition from Netflix and Disney.
According to the LA Times, the company swung to a net loss of $148 million in the third quarter, missing analyst expectations as advertising revenue dropped 16%.
However, CEO David Zaslav still appears optimistic about WDB’s value and its business prospects, telling analysts on Thursday (November 6), “Overall we are very bullish.”
“When you look at our films like Superman, Weapons, and One Battle After Another, the global reach of HBO Max and the diversity of our network’s offerings, we’ve managed to bring the best, most treasured traditions of Warner Bros. forward into a new era of entertainment and [a] new media landscape,” he said.
But given its most valuable assets – including HBO and DC Studios – require massive investment to stay competitive, WBD is in a delicate position where selling or restructuring parts of the company could be its best route to stability.
How the internet is reacting to WBD sale
There’s plenty of chat among netizens about the Warner Bros. Discovery sale, and while opinions are divided, a majority have said Comcast would be their top choice. Notably, there’s a sense of distrust towards Paramount and Disney’s potential handling of WBD’s prestige content.
In response to the potential Comcast takeover, one wrote on Reddit, “Listen, for people mad about monopolies and acquisitions, WB is gonna be sold, that’s a done deal, the question is to who. And I really hope it’s Comcast.”
Another agreed, “This is my position as well. WB is for sale. Period. Whether that happens before the WBD split into two companies or after is irrelevant. Zazlov and company have clearly determined that they don’t have the scale or financial muscle to compete in today’s media landscape.
“They are positioning the company for a sale to the highest bidder, this will not be an independent company by the end of the decade.
“At the end of the day Comcast is probably the best option. It keeps WB out of the Ellisons’ hands, it beefs up Comcast in streaming, and gives extra IP for theme parks – providing more competition to Disney.”
“Out of all the choices, this is who I’d want. Side note: Universal x WBD would be an unstoppable combo when it comes to film libraries,” added a third.
A fourth pointed out, “And it would have theme parks that would absolutely rival Disney World. Imagine having DC characters at Universal studios.”
While most are in favor of Comcast, some have pointed out the regulatory issues it could face. “They are the best bidders right now,” wrote one, to which another replied, “But the ones with the toughest path to regulatory approval because of politics.”
And one person simply wrote, “Love it, this whole news cycle is just an endless succession of rooting for the least bad option.”
