Warner Bros Discovery Inc. (WBD) shares rallied Friday after the media company officially launched a strategic review to maximize shareholder value, and the timing makes sense—The Wall Street Journal reports that several major players are lining up to make bids.
According to the Journal, Paramount Skydance Corp (PSKY), Comcast Corp (CMCSA), and Netflix Inc (NFLX) are preparing offers for the company. This isn't just kicking tires—Warner Bros' board initiated the review after receiving unsolicited interest from multiple parties, suggesting genuine appetite for the assets.
What's Actually on the Table?
Warner Bros is casting a wide net here. The company is considering everything from a sale of the entire business to carving it up into separate deals. One option would split off the Global Networks business, which houses cable properties like CNN, TNT, and Discovery Channel. The other piece would be the Streaming & Studios business, home to the company's content production and direct-to-consumer operations.
The auction process is moving quickly. First-round nonbinding bids are reportedly due by November 20, and the company hopes to wrap up the entire process by year-end. That's an aggressive timeline, but it suggests Warner Bros wants to capitalize on current market interest.
Who's Behind the Bids?
The Paramount Skydance bid has some heavyweight backing. The Ellison family—which includes Oracle Corp (ORCL) co-founder Larry Ellison—and private equity firm RedBird Capital Partners are supporting Paramount's play for Warner Bros.
Meanwhile, Warner Bros is already laying groundwork for potential deals. The company recently clarified that change-in-control clauses in CEO David Zaslav's employment contract won't apply to certain internal restructuring transactions needed for strategic alternatives. That's the kind of housekeeping you do when you're serious about exploring options.
The company is also moving forward with plans to formally divide its assets into two distinct businesses: one housing studios and streaming services, the other containing cable networks. This structure would make it easier to sell pieces separately if that's where bidders' interest lies.
Wall Street Weighs In
Analysts have been busy upgrading Warner Bros Discovery in recent weeks. Wells Fargo reaffirmed an Equal-Weight rating on November 7 but bumped its price target from $21 to $25. Rothschild & Co went further, upgrading the stock from Neutral to Buy on October 30 with a $28 target. Argus Research also moved to Buy from Hold on October 28, setting a $27 target.
Barrington Research maintained its Outperform rating and raised its target from $16 to $25 on October 28. Benchmark kept its Buy rating and increased its target from $18 to $25 on October 22.
Warner Bros Discovery shares were up 3.79% at $22.98 at the time of publication Friday, trading near the stock's 52-week high of $23.19. Investors are clearly betting that this strategic review could unlock significant value, whether through a full sale or a breakup of the company's assets.
