Warner Bros Discovery Stock Spikes On Takeover Buzz — But Writers Guild Slams Potential Paramount Merger As ‘Disaster’

• Since the rumors of Paramount’s interest floated around for the first time (Sept. 11), WBD stock has gained about 70%.
• WBD confirmed Tuesday morning that its board has initiated a review of strategic alternatives to maximize shareholder value.
• This week, a Wall Street firm named Netflix, Apple, Amazon, and Comcast as potential suitors.

Paramount Skydance's (PSKY) rumored bid for fellow media conglomerate Warner Bros. Discovery, Inc. (WBD) has reportedly received a thumbs-down from the Writers Guild of America (WGA), which represents writers in film, television, radio, and online media.

WGA Pledges To Oppose Deal

According to a Bloomberg report citing an emailed statement from WGA, the rumored Paramount-WBD combo would be a disaster for all stakeholders. "Merger after merger in the media industry has harmed workers, diminished competition and free speech, and wasted hundreds of billions of dollars better invested in organic growth," the union said.

It sees the potential combination as "a disaster for writers, for consumers, and for competition." The guild also said it will urge press regulators to block the deal.

WBD Initiates Strategic Review

The guild's opposition comes amid media reports that WBD had shot down overtures from Paramount. CNBC's David Faber reportedly said on Wednesday that Paramount made three bids for WBD, which the latter rejected. The final bid was $24 per share, with 80% of the offer paid in cash. Previously, Paramount reportedly offered between $22 per share and $24 per share. 

WBD confirmed Tuesday morning that, while it continues to advance its previously announced plan to separate Discovery Global, its board has initiated a review of strategic alternatives to maximize shareholder value. WBD CEO David Zaslav said, "It's no surprise that the significant value of our portfolio is receiving increased recognition by others in the market."  "After receiving interest from multiple parties, we have initiated a comprehensive review of strategic alternatives to identify the best path forward to unlock the full value of our assets."

WBD stock ended Thursday's session up 3.51% at $21.25. Since rumors of Paramount's interest first surfaced (Sept. 11), WBD stock has gained about 70%. The company now boasts a market capitalization of $52.61 billion compared to Paramount's $18.16 billion. Paramount, which merged with David Ellison's Skydance in early August, has seen its stock record a more modest 9% gain during the period.

For the year-to-date period, WBD stock has risen 101% compared to a 58.5% gain for Paramount stock.

A New York Post report stated on Thursday that the Trump administration is reportedly favoring Paramount's takeover of WBD.

What Retail Traders Feel About WBD

On Stocktwits, retail traders stayed 'extremely bullish' toward WBD stock, with the message volume on the stream also 'extremely high.' Paramount stock, however, elicited 'neutral' sentiment, accompanied by 'normal' message volume.

Writing on the WBD stream, a user flagged the difficulty of getting the deal done, including a potential legal battle. 

Another user sees the leakage of deal news rumors as a ploy to lift WBD's stock price. "The higher the market price goes, the higher the buyout," they said.

https://stocktwits.com/Annie_Preferred/message/633518386

In a report released Tuesday, Benchmark analysts raised WBD's price target to $25 from $18, citing the company's decision to explore strategic alternatives, the Fly reported. The firm named Netflix, Apple, Amazon, and Comcast as potential suitors, though it stated that the latter three might face transactional friction from the Trump administration in the event of a deal. On the earnings call, however, Netflix's management ruled out a merger with a traditional media company.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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