<\/p>\n
Warner Bros. Discovery\u2019s winnowing of bidders is expected to accelerate this week.<\/p>\n
Monday marks the deadline for a second round of proposals, which Warner\u2019s board members anticipate will bring sweetened bids from the three rivals vying for the prize. Comcast, Paramount and Netflix each submitted initial non-binding offers last month, forming the auction\u2019s floor. <\/p>\n
Warner bankers privately have signaled to the interested parties that this round may not be the final flex, but they do anticipate that Monday\u2019s bids will help them zero in on a preferred merger partner, according to people close to the process who were not authorized to comment.<\/p>\n
Warner Bros. Discovery hopes to make its pick before the winter holidays begin.<\/p>\n
\u201cThe global media industry stands at the precipice of historic transformation,\u201d Bank of America media analyst Jessica Reif Ehrlich and three colleagues wrote in a Monday research report. <\/p>\n
The sale of Warner Bros. represents Hollywood\u2019s biggest consolidation since a buying spree that began 30 years ago with Walt Disney Co.\u2019s purchase of Capital Cities, which owned ABC and ESPN. That era was capped by Time Warner\u2019s ill-fated sale<\/a> in the early 2000s to dial-up internet service provider AOL \u2014 a disastrous union that plundered the value of Warner\u2019s prestigious properties. It took more than a decade for the company to recover. <\/p>\n Since then, Netflix, Amazon and Apple have swarmed the field, ushering in a streaming revolution that has dramatically altered consumer behavior, leaving the entertainment industry\u2019s financial foundation \u2014 bulky cable TV bundles and blockbuster theatrical releases \u2014 on shaky legs. <\/p>\n Warner\u2019s current bidding war \u201creflects the economic reality … that mid-sized legacy media studios\/companies can no longer compete with the unit economics of Netflix or the ecosystem of large tech players such as Amazon,\u201d the Bank of America analysts wrote.<\/p>\n They noted that both the Larry Ellison family\u2019s Paramount and Comcast\u2019s NBCUniversal may feel the need to bulk up, prompting both to claw for Warner\u2019s assets, which include the Warner Bros. film and television studios in Burbank, premium channel HBO and streaming service HBO Max. <\/p>\n Representatives of Warner, Paramount, Comcast and Netflix declined to comment.<\/p>\n Paramount is seen as most likely to prevail, given the Ellison family\u2019s vast wealth and political connections. <\/p>\n President Trump considers Larry Ellison among his friends, which could assure a smooth regulatory review process<\/a> with the Justice Department in the United States. The president has indicated he wants to see Ellison control CBS \u2014 currently under the Paramount-Skydance umbrella \u2014 and celebrity.land, which is owned by Warner Bros. Discovery.<\/p>\n Paramount offers the most efficient take-over as it has expressed interest in buying all of Warner, including its cable channels that include TBS, TNT, HGTV, Food Network and Animal Planet. Tech scion and Paramount Chairman David Ellison<\/a> informally kicked off the bidding in September, making three offers by mid-October. <\/p>\n But Warner\u2019s board rejected all three proposals, considering them to be too low. The company then opened the process to other bidders<\/a>, allowing Comcast and Netflix to join the field.<\/p>\n Ellison recently visited oil-rich Middle Eastern countries, holding preliminary talks with sovereign-wealth funds about potentially investing should Paramount win the Warner auction, according to two knowledgeable sources. <\/p>\n Warner Bros. Discovery shares traded around $24 on Monday.<\/p>\n Some analysts expect a surge from Comcast, which is controlled by Philadelphia cable mogul Brian Roberts<\/a>. <\/p>\n Warner Bros. Discovery Chief Executive David Zaslav<\/a> prefers Comcast over Paramount, knowledgeable people say. <\/p>\n Through its ownership of the European broadcaster Sky, Comcast has widened its international footprint. <\/p>\n But Comcast carries significant debt and its stock has been stalled for years.<\/p>\n Comcast and Netflix have each expressed interest in buying only the studios, HBO and the streaming service.<\/p>\n Neither Comcast nor Netflix are interested in Warner\u2019s linear cable channels. Comcast is planning to jettison its own portfolio of cable networks, including USA Network, CNBC, MS NOW (formerly MSNBC<\/a>) and Golf Channel, in a spin-off<\/a> that should finalize in January. The cable channels will form a new entity called Versant.<\/p>\n \u201cThe market is witnessing the endgame of the cable TV era,\u201d the Bank of America analysts wrote. \u201cThe Warner Bros. studio is the crown jewel, with [intellectual property] ranging from Harry Potter to DC Comics to Game of Thrones (and much more).\u201d<\/p>\n Buying Warner Bros. and HBO would boost NBCUniversal\u2019s television production capabilities and its lagging Peacock streaming service, which has struggled to mint scripted streaming hits. <\/p>\n Comcast executives also have an eye on Warner\u2019s beloved franchises that include Superman and other DC Comics, \u201cLord of the Rings,\u201d and \u201cThe Matrix,\u201d which could provide more characters for its growing Universal Studios theme parks.<\/p>\n Netflix also sees great value in the Warner Bros. franchises. In addition, Warner Bros. Television has long been among the industry\u2019s most successful show producers, giving birth to \u201cThe Big Bang Theory,\u201d \u201cTed Lasso,\u201d and \u201cThe Pitt.\u201d<\/p>\n