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Paramount Skydance has already informed Warner Bros. Discovery it believes its $23.50 per share acquisition offer is in the best interest of shareholders. Now it has to plan on what to do if the WBD board disagrees. WBD is openly for sale and intends to publicly announce its plans toward the middle or end of December, according to people familiar with the matter, who asked not to be named because the discussions are private. The legacy media giant, run by Chief Executive Officer David Zaslav, is deciding whether to split the company in two, sell some assets or sell the entire company. Paramount has sent WBD’s board multiple letters explaining why its offer is more valuable to shareholders than splitting the company, signaling negotiations could turn more aggressive if WBD chooses other options. CNBC has reviewed copies of two of the letters. A portion of a Paramount letter dated Oct. 13 specifically details the company’s argument that its latest offer of $23.50 per share “delivers superior value” for WBD shareholders compared with any reasonable plan to break up the company. Roughly a week after receiving that letter, WBD said it would begin “a comprehensive review of strategic alternatives to identify the best path forward to unlock the full value of our assets.” The sale process was formally launched after WBD’s announcement in June that it would split into two companies — a streaming and studios company to be called Warner Bros., which would include WBD movie properties and streaming service HBO Max, and a global networks company called Discovery Global, which would house CNN, TNT Sports and Discovery, among other businesses. Both companies would trade publicly on their own. The strategic options aren’t mutually exclusive. Given an expected yearlong (or more) regulatory approval process, splitting the company into two and then selling one or both parts would be the most tax-efficient way to sell, according to the people familiar with the matter. The split, expected to be completed by April, is a tax-free transaction. Comcast and Netflix have shown interest in acquiring the studio and streaming assets, CNBC has previously reported. If Warner Bros. Discovery decides its best value-creation path is to sell Warner Bros., it plans to make that announcement in December, before the split takes place, said the people familiar. Comcast President Mike Cavanagh said last week during the company’s earnings report that such an acquisition would be complementary to its post-Versant-spin NBCUniversal business. Warner Bros. Discovery is scheduled to announce third-quarter earnings Thursday morning.
