Executive Summary
Warner Bros Discovery's board rejected Paramount's $30 per share offer as 'inadequate,' despite Paramount adding a $41 billion equity backstop from the Ellison family. Bloomberg Intelligence analyst Geetha Ranganathan calculates WBD needs at least $32.50 per share to re-engage, citing undervaluation of TV networks and Netflix termination costs. The Versaunt comparable provides critical validation: Comcast's cable network spin-off trades at 5.2x forward EBITDA versus Paramount's 4.5x valuation for WBD's networks. This 15% valuation gap, combined with WBD's demand for $2 per share in Netflix breakup fees, creates a clear path to $35 per share—the 'knockout bid' threshold that would force Netflix to respond. The removal of Jared Kushner's Affinity Partners from Paramount's financing eliminates political optics concerns. With WBD trading near $30 and the analyst's $35 target representing 17% upside, the market appears to be underestimating the probability of an escalated bidding war. The timing catalyst is clear: both deals face 12-18 month regulatory review periods, creating urgency for final bids.
Key Insights
what Geetha Ranganathan, George Ferguson, Drew Reading, Jonathan Palmer said“If you kind of look at where Versaunt is trading, we get a forward EBITDA multiple of about 5.2 times. Which is higher than what Paramount Skydance had suggested for the valuation of the Warner Brothers Discovery at 4.5x.”
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