Candle Media’s Kevin Mayer, the former top Disney executive and CEO of TikTok, expects the Ellisons to raise their hostile offer for Warner Bros. Discovery as they attempt to woo shareholders away from Netflix.
“There’s nothing but good news” here for Warner Bros. Discovery, he said at the UBS media conference. “The price is going to go higher,” he predicted, maybe by another five to ten billion dollars.
Paramount made six offers for WBD, the latest for $30 a share in cash ($108 billion enterprise value), but all were rejected as the company led by CEO David Zaslav signed a deal with Netflix for $27.75 in cash and stock ($82.7 billion enterprise value) for the studio and streaming assets. Yesterday, Paramount took its offer directly to shareholders in a hostile tender offer. WBD said it’s evaluating the offer.
Mayer said Par’s recycling the same offer it made to management likely won’t cut it. “It’s just a first step,” he said, anticipating “fireworks.”
He should know. He worked closely with Disney CEO Bob Iger on the Mouse’s acquisition of 21st Century Fox in 2019. Disney had a deal in hand with Rupert Murdoch for $28 a share when Comcast came in as a spoiler, offering $35. Boards have a fiduciary duty to consider all offers, certainly higher offers, up until a deal actually closes. Disney upped Comcast with $38 a share and won Fox, but, Mayer noted, “that was a a difficult process that added $19 billion to the price tag. It was still a good deal, but not the exceptional deal that it was before.”
“I think that points to where we might see this going,” he said during a Q&A. He appeared via video.
Mayer said the industrial logic for the acquisition is equally compelling for both Paramount and Netflix as the media landscape shifts.
The question for Netflix will be how regulators will define streaming. Adding HBO Max will expand its already dominant position — something David Ellison has been stressing, and even President Donald Trump noted.
Mayer believes Netflix wants Warner mostly for its IP. “For Netflix — and I could be wrong about this — I think it’s less about HBO Max and more about Warner Bros. the studio. And I think that’s a thing to keep in mind as this moves forward,” he said, implying that Netflix might be willing to make concessions on streaming to get the deal done. “If there are antitrust issues … with respect to HBO Max and the streaming, what would they be willing to give up in order to close this?”
Weighing the offers, he finds them “roughly equal,” depending on the valuation one puts on the cable networks company that WBD would spin off to shareholders in the case of a Netflix deal.
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