When Netflix (NFLX) announced a binding offer to buy Warner Bros. Discovery (WBD), the stock market did not treat the deal as final. Paramount Skydance (PSKY) offered $30 per share. The only problem with the higher offer is that the firm did not secure funding.
Will Netflix’s offer close? Who might end up owning WBD?
Netflix is far from assured in owning WBD. The media giant, worth $431.3 billion, would require the U.S. government to approve the deal. NFLX stock peaked in July at $134.12 and closed at $94.39 last Friday. Its P/E is 39.4 times. It offers to pay $23.25 in cash and $4.50 in stock to buy WBD. Should Netflix shares fall further, the total price offered falls, albeit slightly.
Comcast (CMCSA) has a slim chance of owning WBD. The stock trades at a 4.91 times P/E. To unlock the company valuation discount, Comcast could spin off its legacy business or its NBCU to raise funds.
Disney (DIS) is not likely to bid for WBD. The company needs to prioritize revitalizing its theme parks. In addition, the firm needs to prepare for a CEO succession. Its last succession plan failed when shares underperformed under Bob Chapek’s leadership.
Your Takeaway
Netflix is the frontrunner in owning WBD. Paramount Skydance might have a chance, but it needs its financial backers to guarantee funding.
