Paramount Skydance CEO David Ellison speaks at the Bloomberg Screen Time Conference in Los Angeles on October 9, 2025.
Patrick T. Fallon | AFP | Getty Images
paramount skydance has already informed Warner Bros. Discovery that it believes its offer of $23.50 per share is in the best interests of shareholders. Now we need to plan what to do if the WBD board does not agree.
WBD The company is for sale publicly and plans to unveil its plans in mid-December or late December, said people familiar with the matter, who asked not to be identified because the discussions are private. The traditional media giant, run by CEO David Zaslav, is deciding whether to split the company in two, sell some of its assets or sell the entire company.
Paramount has sent multiple letters to WBD’s board explaining why its proposal is more valuable to shareholders than a separation, suggesting that negotiations could become more aggressive if WBD chooses other options. CNBC has seen copies of two of the letters.
Part of the Paramount letter, dated Oct. 13, specifically details the company’s argument that its latest offer of $23.50 per share “delivers superior value” to WBD shareholders compared to a reasonable separation plan.
About a week after receiving the letter, WBD announced it would begin a “comprehensive review of strategic alternatives to identify the best path forward to maximizing the value of our assets.”
The sale process officially began in June after WBD announced it would split into two companies. One is a streaming and studio company called Warner Bros., which will include WBD movie properties and streaming service HBO Max, and the other is a global network company called Discovery Global, which will include businesses such as CNN, TNT Sports and Discovery. Both companies will be listed independently.
Strategic options are not mutually exclusive. The most tax-efficient way to sell the company would be to split the company in two and sell one or both parts, given that the regulatory approval process is expected to take a year (or more), the people said. The separation is expected to be completed by April and will be a tax-free transaction.
comcast and Netflix CNBC previously reported that the company has expressed interest in acquiring studio and streaming assets. If Warner Bros. Discovery determines the best path to value creation is to sell Warner Bros., it plans to make an announcement in December before the split occurs, the people said.
Comcast President Mike Kavanagh said in the company’s earnings call last week that the acquisitions will complement the NBCUniversal business after the Versant split.
Warner Bros. Discovery is scheduled to report third-quarter results on Thursday morning.
Paramount’s hostile decision
Warner Bros. Discovery has rejected three different offers from Paramount to acquire the company outright. The last stock was priced at $23.50 per share and consisted of 80% cash and 20% stock, CNBC reported last month.
Paramount executives will wait to see if Warner Bros. Discovery’s board decides to negotiate an amicable sale, according to people familiar with the company’s thinking.
But if WBD stalls or decides to go in a different direction, Paramount is considering making a direct offer to shareholders and making a formal hostile bid for the company, the people said.
Warner Bros. Discovery asked Paramount to sign a nondisclosure agreement that included a cease-and-desist clause that would prevent Paramount from making a hostile tender offer in exchange for access to the data room, the people said. One source said Paramount did not sign an NDA to keep its options open.
Spokespeople for Warner Bros. Discovery and Paramount declined to comment.
If Paramount went directly to shareholders, it would argue that its offer is superior to Warner Bros. Discovery’s closing price on September 10, the day before the Wall Street Journal reported that Paramount was preparing a takeover offer for the company. Warner Bros. Discovery’s closing price on September 10 was $12.54 per share. The $23.50 per share offer is 87% higher than the so-called unaffected stock price.
Warner Bros. Discovery will need to convince shareholders that splitting the company or merging the division with another entity, such as NBCUniversal, would be more shareholder-friendly than selling it outright.
Paramount has already provided the formula to Warner Bros. Discovery in an Oct. 13 letter obtained by CNBC. Below are the allegations in a letter signed by Paramount Skydance Chairman and CEO David Ellison to the Warner Bros. Discovery Board of Directors.
“We understand that you and your management team are optimistic about the potential value creation from the planned divestiture. However, a more objective analysis undercuts the consideration for WBD stockholders in our proposal by a significant amount. We have analyzed the value of the divestiture to WBD stockholders, scheduled for the end of 2028, based on the following optimistic assumptions.
Warner Bros. outperforms consensus EBITDA by approximately $500 million (10%) despite the iconic global company that Disney represents across its businesses, and Discovery Global, which trades at the same multiple as Disney, has achieved consensus EBITDA despite significant headwinds and trades at a “sum of its parts” multiple for its business as per analyst surveys.The 25-40% M&A premium applied to Warner Bros. as an example.
Based on these assumptions, the planned separation would generate present value to WBD shareholders of less than $15 per share on a transactional basis, or between $18 and $20 per share, including the strong but uncertain M&A premium to Warner Bros. ”
Paramount’s assumptions do not necessarily align with those of WBD and third-party equity analysts, including Bank of America’s Jessica Lief Ehrlich, who estimated the Warner Bros. deal at $26 a share and the Discovery Global deal at $4 a share, according to an Oct. 21 note to clients.
Regulatory uncertainty
Paramount can also lay claim to the entire deal with Warner Bros. Discovery could argue that it is well-positioned to win regulatory approval, given President Donald Trump’s recent kind words for his father Larry, who is one of the world’s richest men and could contribute tens of billions of his personal fortune to help finance the deal.
“I think we have a great new leader,” President Trump said of David Ellison in an interview on CBS’ “60 Minutes” last week. “I think one of the best things to happen is this show and new ownership, CBS and new ownership. I think this is the greatest thing to happen for a free, open, good news organization in a long time.”
In stark contrast, Trump has repeatedly bashed Comcast CEO Brian Roberts, calling him a “scumbag” and a “slimeball.”
Some analysts have speculated that Comcast is seeking to structure a deal that would create Warner Bros. Discovery and NBCUniversal and combine its studio and streaming assets.
It’s unclear whether shareholders will be bullish on the future prospects of Discovery Global and Warner Bros. as independent companies.
Discovery Global’s collection of linear cable networks, including TNT, TBS and CNN, are facing declining advertising rates on top of annual cable subscriptions that are shrinking by millions of dollars.
If Comcast, Paramount, and Netflix are all potential buyers, HBO Max and Warner Bros. Movie Studios could potentially pay a hefty M&A premium in a sale, but the price would need to be high enough to convince WBD shareholders that it’s a better option than selling the entire company.
Still, even if Paramount decides to make an offer directly to shareholders, there is no guarantee that the tender offer will be successful.
According to Warner Bros. Discovery’s filing, just 20% of Warner Bros. Discovery’s stockholders must have held their shares for at least a year in order to call a special meeting to ward off a hostile bid. Long-term shareholders of Warner Bros. Discovery may argue that the current management and board are the best stewards of the company.
Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC. With Comcast’s planned Versant spinoff, Versant will become CNBC’s new parent company.
