Shares of Warner Bros. Discovery firmed Monday, one of the few equities in the green as tariff and trade uncertainty tanked markets.
WBD has had an exceptional run over the past six months since Paramount began lobbing unsolicited takeover bids, triggering an auction that resulted in Warner’s December deal with Netflix, but with PSKY continuing to push through a hostile tender offer.
Languishing at under $12 last fall, WBD shares have more than doubled to over $28 including a 1% bump today even as the Dow Jones Industrial Average shed 800 points. The Nasdaq, S&P 500 and Russell 3000 are down, respectively, 1.2%, 1% and 1.8%.
Netflix shares fell 3.3% today to around $76. Investors have not been loving its WBD foray. Paramount is down 2%. Most stocks in media and across sectors are closing in the red.
Paramount last offered $30 a share in cash for all of WBD as it tries to derail the giant streamer’s $27.75 cash offer for Warner Bros. studios and streaming. WBD shareholders would also get stock in a new cable spinoff, Discovery Global.
The fight took an unexpected turn last week as WBD and Paramount started a seven-day window ending at 11:59 tonight to give David Ellison’s company the chance to sweeten its offer and make it binding, meaning last and final.
Wall Street analysts and industry insiders anticipate a raise.
Robert Fishman of MoffettNathanson said he expects PSKY to go to at least $32 a share to put pressure on Netflix to match. “But if PSKY truly wants to end a bidding war today, we think a bid in the range of $34 a share would avoid further debate over Discovery Global’s value.”
Netflix co-CEO Ted Sarandos has insisted the company is disciplined and won’t overpay.
Paramount can amend its public tender offer, which now expires on March 2, at any time.
While the current discussions required a dispensation from Netflix, talks could also potentially be extended if there’s progress and Warner’s board has the reasonable expectation of a better deal emerging than the one it’s agreed to. If Warner deems that it’s a better offer, Netflix, which has matching rights, would have four days to respond.
WBD set a March 20 special meeting for shareholders to vote on the Netflix deal. Ahead of that date, the battle has been loud and public as Netflix accuses Paramount of spreading disinformation and Paramount has impugned the process as biased. Both require regulatory approvals from the DOJ and from antitrust watchdogs overseas. Some in Hollywood, like James Cameron, have started to take sides although there are few outright fans of either merger.
Executives are likely to weigh in on earnings calls this week with Paramount’s latest quarterly report teed up for Wednesday afternoon and WBD’s for Thursday morning.
WBD and Paramount reps declined comment.
The U.S. Supreme Court struck down Donald Trump’s most sweeping tariffs on Friday. That was welcome news to many at first but today it’s ben market chaos as an infuriated President looks to circumvent restrictions and trading partners demand clarity. Among media and tech, Disney, TKO and Lionsgate are off 2%. Roku, Meta, Amazon, Spotify, Snap, Live Nation are all lower, along with exhibitors and broadcasters.
