David Zaslav Considers Warner Bros. Discovery’s Future: Sell to David Ellison or Pursue a Split

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David Zaslav Considers Warner Bros. Discovery’s Future: Sell to David Ellison or Pursue a Split

David Zaslav, CEO of Warner Bros. Discovery (WBD), faces crucial decisions regarding the company’s future. His leadership has been marked by significant strategic moves, but now he contemplates whether to sell WBD or pursue a split. This moment could redefine the media landscape.

Potential Sale and Strategic Split

David Ellison, CEO of Paramount, has expressed interest in acquiring WBD. His initial offer of $20 per share was rejected, but he may return with a higher bid. There are discussions around potential backing from third-party investors, including his father, Larry Ellison.

Initial offer dismissed: $20 per share
Ellison’s possible backing: Larry Ellison, Apollo

Ellison argues that media consolidation is vital. At a recent conference, he emphasized the importance of content creation and its impact on shareholder value. He believes larger companies foster storytelling and better engage audiences.

Impending Split of Warner Bros. Discovery

Meanwhile, Zaslav is preparing for a potential split of WBD. This division would separate HBO and Warner Bros. studios from Discovery’s other assets. The split is anticipated to occur by April, designed to enhance the appeal of the studio and streaming assets.

Projected split timing: April 2024
Goals of the split: Unlock value, separate assets

Analysts argue that a standalone WBD could become a prime target for a bidding war among potential buyers, including tech giants like Apple and Netflix. Jessica Reif-Ehrlich from Bank of America touted the post-split value of WBD’s streaming and studio assets.

Industry Reactions and Skepticism

Despite interest from various players, skepticism exists regarding actual deals. Greg Peters, co-CEO of Netflix, indicated that the company prefers building its library rather than acquiring existing content. Similarly, analyst Rich Greenfield noted Netflix’s strength in original IP rather than catalog content.

Netflix’s focus: Build rather than buy
Concerns: Media mergers’ historical performance

As the future of Warner Bros. Discovery hangs in the balance, strategic considerations abound. Whether Zaslav finalizes a split or Ellison secures an acquisition, the outcome will significantly influence the media landscape. The looming decisions will affect stakeholders across the industry.