David Ellison's Skydance Media, backed by Apollo, is actively pursuing a potential $60 billion acquisition of Warner Bros. Discovery (WBD), despite CEO David Zaslav's ongoing plan to split the company by spring and his higher valuation expectations. While Zaslav is reportedly gauging interest from other potential buyers, including Amazon and Netflix, both have publicly dismissed such speculation, positioning Ellison as the most likely suitor for the debt-laden media giant. Industry analysts highlight WBD's substantial debt and past underperformance, suggesting limited strategic alternatives for Zaslav and increasing the likelihood of a deal, even as the proposed split has temporarily bolstered WBD's stock.
David Ellison's Skydance Media, backed by Apollo, is actively pursuing a potential $60 billion acquisition of Warner Bros. Discovery (WBD), despite WBD CEO David Zaslav's efforts to split the company by next spring and his higher valuation expectations exceeding $30 per share compared to Ellison's $22-$24 range. Zaslav has engaged Goldman Sachs to gauge buyer interest, reportedly attracting attention from Netflix and Amazon, though both have publicly dismissed such speculation. This creates a significant valuation gap and a primary, yet potentially opportunistic, buyer scenario. WBD faces significant financial challenges, including a $35.6 billion debt load as of June and a $17 billion bridge loan yet to be refinanced, necessitating the monetization of 20% of a spin-off company. The company has experienced substantial market cap erosion and underperformance since the Discovery-Warner Bros. merger, with streaming operations bleeding cash and content write-downs impacting profitability. While the proposed split has temporarily boosted WBD's stock from below $8 to over $17, its long-term viability and the feasibility of the April split timeline remain uncertain. Industry sentiment suggests WBD's limited strategic options due to its debt and declining assets, positioning Ellison as the most likely suitor. The public denials from Netflix and Amazon further reduce Zaslav's negotiating leverage, despite his attempts to secure a higher valuation. This dynamic implies a high-stakes negotiation where WBD's debt burden and lack of alternative strong bidders could pressure Zaslav to accept a lower offer than initially sought.
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