By Lucas Manfredi

Copyright thewrap

Shares of Warner Bros. Discovery extended their gains over 13% on Friday following news that Paramount is preparing a majority cash bid to acquire the entire company. The stock, which touched a new 52-week high of $18.78 per share on Friday, is up 71.4% year to date and 138.6% in the past year.

The deal, which would be backed by the deep pockets of the Ellison family, would be transformative for the media landscape, combining two major Hollywood studios and streaming platforms, as well as many iconic brands including HBO, Discovery, DC Studios, Comedy Central, MTV, Nickelodeon, BET Media Group and more under one roof.

It comes as the David Zaslav-led media giant has been working towards a split of its linear network (Discovery Global) and studios and streaming businesses (Warner Bros.) by mid-2026.

Guggenheim Securities analyst Michael Morris said the combined entity would be a “significant competitive threat” to the current leaders in the streaming industry and “further pressure smaller players in both subscription appeal to consumers and audience share.”

He noted the combination would strengthen the companies’ negotiating position in future distribution rights renewals with pay-TV distributors and potentially, though marginally, drive some cost benefit in pursuing future sports rights.

“Consumer options for streaming consumption and subscriptions need to consolidate,” Morningstar Research analyst Matthew Dolgin added. “Streaming is critical for legacy media firms’ futures and neither firm is currently among the top three streaming providers, so a combination of their streaming services should greatly help both.”

Wolfe Research’s Peter Supino estimates that a combined Paramount-WBD could generate $3 billion in near-term cost synergies, including roughly $1.5 billion from streaming & studios, $1.2 billion from Warner Bros. corporate costs and roughly $250 million from linear networks.

While a specific price has not been reported on a possible bid, Bank of America analyst Jessica Reif Ehrlich believes Warner Bros. Discovery could be worth roughly $30 per share in a takeout scenario.

“Given WBD’s extremely compelling collection of assets and premier IP, it is conceivable other bidders could come to the table which could drive upside to our previously published private market valuation,” she wrote.

Among the potential rival bidders that MoffettNathanson analyst Robert Fishman floated include Comcast, which is currently in the process of its own spin off of network assets with Versant, and Apollo Global Management and Sony Pictures Entertainment, which previously kicked the tires on Paramount prior to Ellison’s acquisition. However, he noted that Comcast could end up staying on the sidelines to avoid jeopardizing the tax-free status of the Versant spin.

Lloyd Greif, president and CEO of the Los Angeles-based investment firm Greif & Co., also didn’t rule out the possibility of a big tech player like Apple, Amazon, Google or other private equity firms entering the ring.

“Warner Brothers is an extremely attractive asset. I think everybody pays attention to this one and doesn’t let it go,” Greif told TheWrap in an interview. “Splitting would have definitely attracted a feeding frenzy. This move is trying to catch everybody flat footed, but you can’t really catch anybody flat footed for long. They’re all going to think long and hard about getting into a bidding war with Larry Ellison.”

“In any of these scenarios, we view this news as a key milestone in the WBD success story — and potentially the opening of a second chapter for a growing media conglomerate intent on becoming a key future player,” Fishman added.

Though Wall Street analysts and experts said a potential tie-up may be subject to antitrust, regulatory and political scrutiny, they ultimately see a making it through, given the Ellison family’s previous experience closing the $8 billion Skydance merger and relationship with the Trump administration.

“Having recently navigated the regulatory process with the PSKY merger, we must assume current management has insights into the regulatory approval process and would not propose a bid without having a degree of confidence it would receive regulatory approval,” Ehrlich said.

Shares of Paramount, which briefly hit a new 52-week high of $18.65 per share on Friday, are up 52.9% year to date.