Mario Gabelli signals support for Paramount in Warner fight

Value investor Mario Gabelli said he will likely tender his clients’ roughly 5.7 million Warner Bros. Discovery shares to Paramount Skydance to try to trigger a bidding war, predicting Paramount will have to raise its $30-a-share all-cash bid and that Netflix will likely counter; Warner Bros. shares closed up 3.8% at $28.26. Gabelli, who was impressed by Paramount’s UBS presentation addressing regulatory risks, favors the Paramount tender because its all-cash terms don’t rely on stock or a cable-network spinoff as Netflix’s $27.75-per-share cash-and-stock proposal does, and he sees a Paramount win as positive for movie theaters (he has also added stakes in Marcus Corp.).

Analysis

Mario Gabelli said he is "highly likely" to tender his clients' almost 5.7 million Warner Bros. Discovery shares to Paramount Skydance to try to spark a bidding war, predicting Paramount will have to raise its $30-per-share all-cash bid and that Netflix will likely counter; Warner Bros. shares closed up 3.8% at $28.26 and Gabelli's stake is worth roughly $160 million at that price. Gabelli favors the Paramount tender because it is all-cash and does not rely on publicly traded stock or a spinoff of Warner Bros.' cable networks, in contrast to Netflix's $27.75-per-share cash-and-stock proposal. He attended Paramount's UBS presentation, said management addressed regulatory risks sufficiently to impress him, and characterized the campaign as "early rounds" of what he expects to be a multi-round contest. The likely practical implications are upward pressure on offer prices and near-term upside for WBD equity if bids escalate; a Paramount victory would, in Gabelli's view, be accretive to theatrical distributors, which explains his concurrent purchases of Marcus Corp, while regulatory uncertainty and a counterbid process present meaningful volatility and execution risk.

Key Decisions for Investors

• Monitor WBD tender activity and upcoming bid developments closely and be prepared to add tactical exposure to WBD to capture potential bid escalation, but size positions conservatively given regulatory and counterbid uncertainty
• Consider selective exposure to theatrical beneficiaries such as Marcus Corp where Gabelli has recently added shares, acknowledging his view that a Paramount acquisition is positive for traditional film releases while remaining mindful of broader box-office headwinds
• Manage event risk with disciplined hedging or scaled entries — for example using options collars, staggered purchases, or position limits — and wait for clear bid increases or regulatory filing milestones before committing material long-term capital