Paramount Skydance prepares Ellison-backed bid for Warner Bros. Discovery - WSJ

Paramount Skydance prepares Ellison-backed bid for Warner Bros. Discovery - WSJ

Warner Bros. Discovery's streaming and studios unit is poised to attract potential acquirers following its planned separation from the company's networks business in 2026. Wells Fargo analysts have identified several potential buyers, with Netflix emerging as the most compelling candidate .

The brokerage firm has lifted its price target on Warner Bros. Discovery (WBD) stock by $1 to $14, citing a 30% probability of a sale of the unit. Analysts value WBD's content operations at approximately $65 billion, or over $21 a share in a bullish scenario .

Wells Fargo analysts highlighted Netflix as the most likely buyer, noting that the streaming giant's investors would likely support a deal. Other potential acquirers include Amazon, Apple, Comcast, Sky (Paramount's parent company), and Sony. However, regulatory hurdles and financing constraints could pose challenges for some of these players .

A Netflix acquisition would provide the streaming giant with access to WBD's $12 billion annual content spend, a library worth $6.5 billion, and a 100-acre studio lot. Wells Fargo estimates that such a deal could deliver an 18% earnings accretion by 2030 and push Netflix toward a $1 trillion market capitalization .

Paramount Skydance, backed by Ellison, is also preparing a bid for Warner Bros. Discovery, as reported by The Wall Street Journal. This move could add to the competitive landscape for WBD's streaming and studios unit .

As the market awaits further developments, investors should keep an eye on potential regulatory approvals and financing constraints that could impact the acquisition process. The valuation of WBD's content operations and the competitive landscape will be key factors in determining the outcome of these potential deals.

References:
Investing.com — Wells Fargo sees Warner Bros. Discovery as potential Netflix takeover target
The Wall Street Journal — Paramount Skydance prepares Ellison-backed bid for Warner Bros. Discovery