A former Disney executive who oversaw its dealmaking expects “more fireworks” in the bidding war for Warner Bros.
“I would be very surprised if we don’t see a sweetened, and perhaps meaningfully sweetened, offer” from Netflix, Paramount Skydance, or both, said Kevin Mayer, Disney’s former top dealmaker, on Tuesday at the UBS media conference.
On Friday, Netflix agreed to buy Warner Bros. Discovery’s streaming and studio assets for $82.7 billion, including debt. Paramount Skydance then launched a hostile offer, saying on Monday that it’s willing to pay $108.4 billion for the whole firm, including the TV networks like CNN and HGTV. Executives at Netflix and Paramount CEO David Ellison have each framed their offers as the best for employees, Hollywood, WBD shareholders, and TV viewers. Both suitors also said they’re confident they can pass regulatory scrutiny.
Mayer, now the co-CEO of Cocomelon owner Candle Media, said he thinks Paramount’s hostile bid will reignite the faceoff for Warner Bros. and force the eventual winner to fork over more money.
“From the Warner Bros. Discovery perspective, this is nothing but good news,” Mayer said.
Mayer added: “Does it move up another $5 billion or $10 billion? I think it probably does. That’s what it’s going to take to win it.”
Mayer said the battle for Warner Bros. reminds him of the fight for control of 21st Century Fox between Disney and Comcast, which he was involved in during his tenure at the Mouse House.
Under Mayer, Disney agreed to buy Fox’s studio, FX, and its stake in Hulu for $52.4 billion in equity, or $66.1 billion with debt, in December 2017. Six months later, cable giant Comcast made a $65 billion all-cash offer for those same assets. Disney ultimately won, but it was forced to pay a heftier price of $71.3 billion. Mayer helped engineer Disney’s initial agreement with Fox, but had moved to a role atop Disney’s streaming business by the time the acquisition closed.
“That was a difficult process,” Mayer said of Comcast’s bid for Fox. “It added $19 billion to the price tag. Still a good deal, but not the exceptional deal that it was before we had to pay more.”
While Disney’s deal with Fox gave it control over Hulu and bolstered its library, Disney activist investor Nelson Peltz argued that the Mouse House had shown “poor judgment” by “overpaying for the 21st Century Fox assets.”
As Netflix and Paramount vie for Warner Bros., Mayer said the Disney-Comcast showdown “points to where we might see this going.”
That’s because Ellison’s $30-per-share hostile bid, which Paramount also sent to WBD’s board, might not be rich enough, Mayer said.
“David Ellison has already kind of hinted at that, that he hasn’t done his best and final yet, and I suspect he hasn’t,” Mayer said.
Mayer was likely referencing a text message from Ellison to WBD CEO David Zaslav, which was made public as part of a Paramount filing on Monday: “Please note importantly we did not include ‘best and final’ in our bid.”
“The team at Paramount is aggressive,” Mayer said. He pointed to the gargantuan amount of money that David Ellison and his father, Oracle billionaire Larry, have at their disposal.
“I don’t think there’s a whole lot of hesitancy to spend it,” Mayer said.
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