The race to buy entertainment giant Warner Bros. Discovery (WBD) has already become a drama on par with anything the studio has yet released, and new signs have emerged to suggest it may not have reached its zenith yet. New reports have Paramount Skydance (PSKY) considering a lawsuit, a point that Warner investors are not pleased about. In fact, Warner shares were down fractionally in the closing minutes of Monday’s trading.
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Paramount, we know, recently took its case directly to shareholders, offering $30 per share outright for outstanding Warner shares from anyone who wanted to sell. But now, there are signs that Paramount may pull the rug out from under that proposal, and instead sue Warner over how the board handled negotiations.
Paramount executives accused Warner of a “potential conflict of interest” thanks to the connections between David Zaslav and Netflix CEO Ted Sarandos. Netflix’s (NFLX) offer of cash and stock is actually somewhat inferior to Paramount’s all-cash offer, reports suggest, which makes it all the stranger that that is the route Warner looks like it is headed, at least, for now.
The Human Cost
Meanwhile, controversial analyst Jim Cramer took a look at the matter and wondered what kind of human toll the purchase process would bring, especially if Paramount wins after all. Cramer wondered how many people would lose their jobs, specifically, and brought out a thought-provoking point.
Cramer noted, “Job formation of the Paramount bid, versus the Netflix bid, how many people have to be trimmed in the Paramount bid versus nobody in the Netflix bid for Warner Brothers. Discovery.” That might be oversimplifying things—after all, there will likely be some redundancy even if Netflix wins—but it is a safe bet that Paramount would have more role duplication with Warner on this one.
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 174.02% rally in its share price over the past year, the average WBD price target of $24.20 per share implies 15.94% downside risk.
