Paramount Skydance CEO David Ellison speaks during the Bloomberg Screentime conference in Los Angeles on October 9, 2025.
Patrick T. Fallon | Afp | Getty Images
Paramount Skydance has a clear holiday wish this year: acquiring Warner Bros. Discovery. Fittingly, it may have to wait until Christmas to find out if Santa Zaslav delivers.
Warner Bros. Discovery is openly for sale and intends to publicly announce its plans toward the middle or end of December, according to people familiar with the matter, who asked not to be named because the discussions are private. The legacy media giant, run by Chief Executive Officer David Zaslav, is deciding whether to split the company in two, sell some assets or sell the entire company.
Paramount has sent Warner Bros. Discovery’s board multiple letters explaining why its offer is more valuable to shareholders than splitting the company, signaling negotiations could turn more aggressive if WBD chooses other options. CNBC has reviewed copies of two of the letters.
A portion of a Paramount letter dated Oct. 13 specifically details the company’s argument that its latest offer of $23.50 per share “delivers superior value” for WBD shareholders compared to any reasonable plan to break up the company.
Roughly a week after receiving that letter, WBD said it would begin “a comprehensive review of strategic alternatives to identify the best path forward to unlock the full value of our assets.”
The sale process was formally launched after WBD’s announcement in June that it would split into two companies — a streaming and studios company to be called Warner Bros., which would include WBD movie properties and streaming service HBO Max, and a global networks company called Discovery Global, which would house CNN, TNT Sports and Discovery, among other businesses. Both companies would trade publicly on their own.
The strategic options aren’t mutually exclusive. Given an expected year-long (or more) regulatory approval process, splitting the company into two and then selling one or both parts would be the most tax-efficient way to sell, according to the people familiar with the matter. The split, expected to be completed by April, is a tax-free transaction.
Comcast and Netflix have shown interest in acquiring the studio and streaming assets, CNBC has previously reported. If Warner Bros. Discovery decides its best value-creation path is to sell Warner Bros., it plans to make that announcement in December, before the split takes place, said the people familiar.
Comcast President Mike Cavanagh said last week during the company’s earnings report that such an acquisition would be complementary to its post-Versant-spin NBCUniversal business.
Warner Bros. Discovery announces third-quarter earnings Thursday morning.
Paramount’s hostile decision
Warner Bros. Discovery has rejected three different offers from Paramount for a full takeover of the company. The last, for $23.50 a share, was comprised of 80% cash and 20% equity, CNBC reported last month.
Paramount executives are willing to wait to see if Warner Bros. Discovery’s board decides to engage in friendly sale discussions, according to people familiar with the company’s thinking.
But, if WBD stalls in its decision or decides to move in a different direction, Paramount has discussed taking an offer directly to shareholders and formalizing a hostile bid for the company, the people said.
Warner Bros. Discovery asked Paramount to sign a non-disclosure agreement that includes a standstill provision that would prevent Paramount from launching a hostile tender offer in return for access to its data room, according to people familiar with the matter. Paramount hasn’t signed the NDA to keep its options open, one person said.
Spokespeople for Warner Bros. Discovery and Paramount declined to comment.
If Paramount appeals directly to shareholders, it will argue that its offer is superior relative to Warner Bros. Discovery’s closing price on Sept. 10, the day before the Wall Street Journal reported Paramount was preparing a bid for the company. 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.”
Warner Bros. Discovery will have to persuade its shareholders that splitting the company or merging one of its units with another entity, such as NBCUniversal, is more shareholder friendly than an outright sale.
Paramount has already laid out the math to Warner Bros. Discovery in the Oct. 13 letter obtained by CNBC. Here’s the argument from the letter, addressed to the Warner Bros. Discovery board of directors and signed by Paramount Skydance Chairman and CEO David Ellison:
“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.”
Regulatory uncertainty
Paramount can also argue its deal for the entirety of Warner Bros. Discovery is well positioned to gain regulatory approval, given President Donald Trump’s recent kind words about Ellison and his father, Larry, who is one of the world’s richest people and who could contribute tens of billions of his personal money to help finance a transaction.
“I think you have a great, new leader,” Trump said of David Ellison during a “60 Minutes” interview last week. “I think one of the best things to happen is this show and new ownership, CBS and new ownership. I think it’s the greatest thing that’s happened in a long time to a free and open and good press.”
In stark contrast, Trump has repeatedly bashed Comcast CEO Brian Roberts, including calling him a “lowlife” and a “slimeball.”
Some analysts have speculated Comcast could try to structure a deal with Warner Bros. Discovery where it would spin NBCUniversal and merge it with the studio and streaming assets.
It’s unclear if shareholders will be bullish on the future prospects of either Discovery Global or Warner Bros. as standalone entities.
Discovery Global’s collection of linear cable networks, such as TNT, TBS and CNN, faces declining advertising rates on top of annual cable subscriptions that are falling by the millions.
Warner Bros.’s HBO Max and the Warner Bros. movie studio may command a sizable M&A premium in a sale if Comcast, Paramount and Netflix are all potential buyers, but the price would have to be high enough to convince WBD shareholders that it’s a better option than selling the entire company.
Still, even if Paramount does decide to take an offer directly to shareholders, tender offers aren’t guarantee to succeed.
A threshold of just 20% of Warner Bros. Discovery shareholders who have held the stock for at least a year is needed to call a special meeting to potentially fight off a hostile bid, according to a company filing. Those long-term Warner Bros. Discovery shareholders may argue current management and the board are the best stewards of the company.
Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC. Versant would become the new parent company of CNBC upon Comcast’s planned spinoff of Versant.
