Comcast has taken a step closer to making an offer for parts of Warner Bros. Discovery — but not WBD in its entirety — with the retention of two banking advisers, Variety has confirmed.
Comcast is among the players looking to potentially cut an M&A deal with Warner Bros. Discovery, which officially put itself on the block last month. Others seeking a play for WBD include David Ellison’s Paramount Skydance, which has made offers for the whole company, and Netflix.
Comcast has hired Goldman Sachs and Morgan Stanley to evaluate a potential bid for WBD assets and has gained access to WBD’s financial data, a source familiar with the matter said, confirming a report by Reuters.
Comcast is in the process of splitting off most of NBCUniversal’s cable networks into a new company, Versant, a transaction expected to be completed by the end of 2025. The thinking is that Comcast would look to bid for WBD’s streaming and studios business; Warner Bros. Discovery is itself has been in the process of separating into two entities, Warner Bros. (HBO Max and studios) and Discovery Global (TV networks and Discovery+).
Last month Warner Bros. Discovery’s announced that it had received in-bound M&A interest from “multiple parties” and has commenced a process to review such offers. WBD’s board said it will consider a deal structure that would enable a merger of Warner Bros. (the streaming and studios side) with a third-party acquirer alongside a spin-off of Discovery Global to shareholders.
Mike Cavanagh, Comcast’s co-CEO, told analysts during the cable and media giant’s Q3 earnings call last week that “the bar is high” for the company to consider a major merger of acquisition. But he didn’t rule anything out — and suggested that Comcast’s ability to secure federal approval for any transaction would improve once the Versant spinoff of its linear cable channels (other than Bravo) into is completed.
Cavanagh said that “what we’d be looking for and what we’re going to look like post-Versant spin, I think more things are viable than maybe some of the public commentary that’s out there.”
Ellison, who just closed the deal to form Paramount Skydance in August, has made three escalating bids for Warner Bros. Discovery in its entirety. The board of Warner Bros. Discovery has rejected all three as too low, including Ellison’s most recent one last month for $23.50/share.
Meanwhile, Netflix is exploring a bid for some piece of WBD and retained investment bank Moelis & Co. to put together a prospective offer, Reuters reported last week. Moelis was the financial adviser to David Ellison’s Skydance Media in its takeover of Paramount Global to former Paramount Skydance.
Netflix co-CEO Ted Sarandos told investors on its Q3 earnings interview last week that the company has “no interest in owning legacy media networks,” indicating that an acquisition of WBD in its entirety — including networks like CNN, TBS, HGTV and Food Network — is off the table. Sarandos did say Netflix can be “choosy” about its M&A targets, but he added: “Nothing is a must-have for us to meet our goals that we have for the business.”
Warner Bros. Discovery CEO David Zaslav, speaking on the media conglom’s Q3 earnings call Thursday, said, “You’ve all seen media reports as to potential interested parties, and I won’t comment on anything specific. But it’s fair to say that we have an active process underway. When you look at our films like ‘Superman,’ ‘Weapons’ and ‘One Battle After Another,’ the global reach of HBO Max and the diversity of our networks offerings, we’ve managed to bring the best, most treasured traditions of Warner Bros. forward into a new era of entertainment and new media landscape.”
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