Kevin Mayer, co-CEO of Candle Media and former Disney executive, predicts that Paramount will continue to increase its hostile takeover bid for Warner Bros. Discovery.
The executive would know, having been involved in every step of Disney’s $71.3 billion acquisition of Fox. Mayer was the company’s chief strategy officer at the time, as Disney entered a bidding war with Comcast and ultimately won.
Now that Warner Bros. Discovery is up for sale, Mayer predicts Paramount and the Ellison family won’t back down anytime soon.
“I would be very surprised if we didn’t see an improved and perhaps significantly improved offering during this process,” he said on a panel at a UBS conference on Tuesday. “I think David Ellison has already suggested that he hasn’t done his best yet and hasn’t done his best yet, and I suspect that’s not the case. So I think we’re going to have more fireworks here.”
WBD accepted Netflix’s offer for the company last Thursday. Since then, Paramount has gone directly to shareholders with its hostile takeover bid at $30 per share, a bid valued at $108 billion. WBD CEO David Zaslav signed a deal with Netflix for $27.75 in cash, valued at $82.7 billion.
“From Warner Bros. Discovery’s perspective, it’s just good news, the price is going to go up,” Mayer said. “The team at Paramount is aggressive. David and Larry Ellison certainly have a huge amount of money, and I don’t think they’re very reluctant to spend it. I think they see a good outcome in the end if they can come out on top.”
The Ellison family took control of Paramount Global over the summer, merging with David Ellison’s Skydance Media. The Trump administration approved the merger in July.
Looking towards a future where Warner Bros. would be consolidated into another entertainment giant, Mayer said the industry will certainly shrink. The executive is currently a market seller with companies like Hello Sunshine and Moonbug.
“There will be fewer competitors, a smaller industry with probably reduced production of creative content,” he said. “As we have fewer revenue opportunities, operating costs and programming costs must decrease. »
Mayer suggested that Netflix’s main interest lies in Warner Bros.’s film and television studios, rather than HBO Max, although of course they would benefit from it if they bought it. The executive hinted that Netflix might be willing to make concessions on streaming to get the deal done.
“If you really want to define these franchises and have them at your disposal for the long term, and Warner Bros. other than Disney is the second best studio, I think, with these franchises in place, it just makes a lot of sense,” Mayer said. “It gives you permanent and privileged access to content that would otherwise be more competitive and more difficult and uncertain to access.”
Weighing the offers, the executive found them “roughly equal,” based on how much one values the cable network company WBD would redistribute to shareholders in the case of a deal with Netflix. He added that there is an “industrial logic” to both agreements.
