Warner Bros. Discovery and Paramount Skydance Shares Surge Amidst Buyout Rumors
Shares of both Warner Bros. Discovery (WBD) and Paramount Skydance experienced significant increases on Thursday following reports that Paramount Skydance is preparing a bid to acquire the entirety of Warner Bros. Discovery. This potential deal would further consolidate the US media landscape, already heavily influenced by the rise of streaming services.
The Proposed Deal and Market Reaction
The rumored offer, initially reported by the Wall Street Journal, would encompass Warner Bros. Discovery's extensive assets, including CNN, HBO, and the film studio responsible for blockbuster franchises like Barbie and Harry Potter. Warner Bros. Discovery declined to comment on the report, and Paramount Skydance did not respond to requests for comment. The market reacted positively, with Warner Bros. Discovery shares closing up 29% and Paramount Skydance shares rising 16%.
Key Players and Financial Backing
David Ellison, head of Paramount Skydance, is spearheading the potential acquisition. His father, Larry Ellison, co-founder of Oracle, provides substantial financial backing. Larry Ellison briefly held the title of the world's richest person this week. This news comes shortly after the completion of Paramount Skydance's own $8 billion merger, where Skydance acquired Paramount, the parent company of CBS and creators of shows such as Yellowstone.
Strategic Implications and Industry Consolidation
A merger between Paramount Skydance and Warner Bros. Discovery would create a powerful entertainment conglomerate, possessing a vast portfolio of valuable intellectual property. Brandon Katz from Greenlight Analytics noted that the combined entity would possess "the deepest roster of blockbuster franchise IP in all of Hollywood." This consolidation would allow the new company to better compete with streaming giants like Netflix and Disney.
Antitrust Concerns and Potential Challenges
The proposed merger will face scrutiny from regulators, particularly regarding potential antitrust issues. The deal could also face challenges related to cost savings and possible major layoffs within Hollywood's creative community. One advisor close to both companies notes that the merger would mean “one less green light place in town, which puts pressure on the agents and managers".
Ellison's Grand Ambitions and the Future of Streaming
David Ellison's pursuit of Warner Bros. Discovery demonstrates his commitment to becoming a dominant force in the entertainment industry. This follows Paramount Skydance's recent UFC deal, hinting at broader ambitions beyond just streaming. WBD CEO David Zaslav predicted the streaming landscape would "rationalize," leaving only a few key players. A successful acquisition of Warner Bros. Discovery would position Ellison as one of the entertainment giants poised to remain standing.