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Paramount Considering Hostile Bid for Warner Bros. Discovery: Report

A new CNBC report offers new insights into Paramount/Warner Bros. Discovery, including David Ellison/Skydance considering a hostile bid.

Here's what we know. Warner Bros. Discovery CEO David Zaslav and the WBD board of directors have made it clear that they're open to fielding offers from parties interested in acquiring the company or a portion of it. The news came as WBD continues its effort to split the company into two entities, a move that the Board aims to complete by April 2026, with the understanding that the process could also end without any deals in place. Since that time, David Ellison/Skydance, having recently finalized its takeover of Paramount, has reportedly made three offers for the company as a whole – while rumblings about Netflix and Comcast/NBCUniversal also readying bids have grown louder. Earlier today, CNBC provided some additional insights into the deal-making process behind the scenes, citing sources and access to communications sent from Ellison to WBD's board. Here's a look at some of the highlights, along with previously released intel:

For WBD, December Appears to Be Decision-Making Time: Whether a deal gets made for the whole company or part of it, or if the board opts not to make a deal of any kind, it seems December is when WBD plans to make a decision.

WBD Reportedly Rejected 3 Bids From Ellison/Paramount: All three offers were for a full takeover, with the latest reportedly valued at $23.50/share (80% cash and 20% equity).

Ellison/Paramount Reack Out to WBD's Board of Directors: Here's a look at the letter CNBC obtained that was sent to WBD's Board of Directors on October 13th and signed by Ellison, making the case for why Skydance's offer to purchase WBD as a whole is the best choice for shareholders:

We understand that you and your leadership team are optimistic about potential value creation from your planned break-up. However, a more objective analysis yields results meaningfully below the consideration to WBD shareholders in our proposal. We have analyzed the value of the planned break-up to WBD shareholders at the end of 2028 based on optimistic assumptions, including:

• Warner Bros. outperforming consensus EBITDA by ~$500 million (10%) and trading at the same multiple as Disney, despite the iconic global company that Disney represents across its businesses
• Discovery Global achieving consensus EBITDA, despite meaningful headwinds, and trading at the media of analyst research "sum-of-the-parts" multiples for the business
• An illustrative 25-40% M&A premium applied to Warner Bros.

Based on these assumptions, the planned break-up would generate a present value to WBD shareholders of less than $15 per share on a trading basis, or ~$18 to ~$20 per share including a robust, yet highly uncertain, M&A premium for Warner Bros."

What Happens If WBD Passes on Paramount/Skydance Offers? According to CNBC's reporting, it appears Ellison would be willing to take his offer directly to WBD's shareholders in what would be a hostile bid for the company. Ellison would argue that his offer is considerably better than where WBD's closing price landed on September 10th (the day before reports surfaced that Ellison's Paramount was preparing a bid for WBD). CNBC's reporting noted: "Warner Bros. Discovery closed at $12.54 per share on Sept. 10. A $23.50 per share offer is 87% higher than the so-called unaffected share price." For its part, WBD leadership would need to make the case that moving forward with splitting the company and/or "merging one of its units with another entity" (for example, Comcast/NBCUniversal or Netflix) is the better move.

What Are the 2 Companies WBD Is Planning to Split Up Into? Here's a look at the two companies' structures:

Warner Bros. (previously "Streaming & Studios"): Warner Bros. Television, Warner Bros. Motion Picture Group, DC Studios, HBO and HBO Max (including international sports offering), Warner Bros. Games, Tours, Retail and Experiences, and studio production facilities in Burbank and Leavesden. David Zaslav, President and CEO of WBD, will serve as President and CEO. The leadership team will include:

• Pam Abdy, Co-Chair and CEO Warner Bros. Motion Picture Group
• Priya Aiyar, Chief Legal Officer
• Casey Bloys, Chairman and CEO, HBO and HBO Max
• Bruce Campbell, Chief Operating Officer
• Mike De Luca, Co-Chair & CEO, Warner Bros. Motion Picture Group
• Channing Dungey, Chairman & CEO, Warner Bros. TV Group
• Robert Gibbs, Chief Communications & Public Affairs Officer
• James Gunn, Co-Chairman and CEO, DC Studios
• Lori Locke, Chief Accounting Officer (reporting to the Chief Financial Officer)
• JB Perrette, CEO & President of Streaming and Games
• Peter Safran, Co-Chairman and CEO, DC Studios
• Avi Saxena, Chief Technology Officer (reporting to Perrette)

Discovery Global (previously "Global Networks"): Entertainment, sports, and news television brands, including CNN, TNT Sports in the U.S., and Discovery, top free-to-air channels across Europe, and digital products such as the Discovery+ streaming service, CNN's upcoming streaming service, and Bleacher Report (B/R). Gunnar Wiedenfels, CFO of WBD, will serve as President and CEO. The leadership team will include:

• David Duvall, Chief Technology Officer
• Amy Girdwood, Chief People & Culture Officer
• Ryan Gould, President, US Ad Sales GTM (reporting to Zeiler)
• Anil Jhingan, Chief Development Officer
• Kasia Kieli, President and MD, Poland and CEO, TVN
• Fernando Medin, President, International
• Scott Miller, President, Distribution (reporting to Zeiler)
• Fulvia Nicoli, Executive Vice President, Content Strategy & Insights (reporting to Zeiler)
• Brian Rauch, Chief Accounting Officer (reporting to Woodford)
• Luis Silberwasser, Chairman and CEO, TNT Sports
• Mark Thompson, Chairman and CEO, CNN Worldwide
• Sue Underwald, Chief Legal Officer
• Bobby Voltaggio, President, US Ad Sales Platform Monetization (reporting to Zeiler)
• Fraser Woodford, Chief Financial Officer
• Gerhard Zeiler, President, US, UK & Germany, Discovery+ and Chief Content Officer

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