And the process has officially begun. Right now, there are three companies in the running for entertainment giant Warner Bros. Discovery (WBD). By the end of the process, none of them may walk away with the prize. Paramount Skydance (PSKY) has submitted what is now its fourth bid, while both Netflix (NFLX) and Comcast (CMCSA) have thrown in a new bid each. This was good enough for investors, though, as shares were up nearly 1.5% in the closing minutes of Friday’s trading.
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For its part, Paramount was considering submitting a bid higher than the $23.50 per share offer that it filed previously, especially given that Warner already rejected the amount the last time Paramount offered it. Meanwhile, both Comcast and Netflix put in bids for just the film and streaming assets, with no real interest in the parts of Warner that would have become Discovery Global if the planned spin-off had materialized instead. Interestingly, Paramount is the only bidder planning to take the whole shooting match should it win.
Reports also note that Netflix was planning to be “disciplined” with its bid, and there was no further word on whether or not any Arab sovereign wealth funds—Saudi Arabia, Abu Dhabi, or Qatar—would be involved in the bidding process.
Everybody’s Got a Problem With This
Meanwhile, there are growing concerns that everybody will face some kind of regulatory headache as a result of a potential Warner buy. While some may quibble over just how much sense some of these regulatory concerns make, the point remains that they are viable regardless.
Naturally, Paramount and Comcast have clear problems. Both of them are television owners, and thus will run afoul over concerns about news concentration. Paramount, owner of CBS News, may be able to break through that since it recently put Bari Weiss in charge of the news operation. It also seems to have President Trump’s ear at this point. Comcast, meanwhile, has NBC News and other news operations. But given that Comcast is planning to spin off most of its television into Versant, the problem may be moot. Meanwhile, Netflix has no cable presence, but may be too big a streaming service for the government to lightly approve.
Is WBD Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on WBD stock based on eight Buys and 10 Holds assigned in the past three months, as indicated by the graphic below. After a 125.71% rally in its share price over the past year, the average WBD price target of $22.08 per share implies 4.64% downside risk.
