A new feature piece at THR has spoken with a number of financial analysts who all seem to be in agreement about one thing – all have doubts a potential deal between Warner Bros. Discovery and Paramount Global could happen.
When news broke just prior to Christmas of WBD’s David Zaslav meeting with Paramount CEO Bob Bakish and chairwoman Shari Redstone about the possibility of some kind of deal, the industry was a bit taken aback.
Shares of both companies dropped in the days after, and now Wells Fargo analyst Steven Cahall has told investors in a report: “We prefer WBD stand-alone”.
Said report recently explored various scenarios – the first being WBD buying Paramount which he dubs a “bad idea”. The second, an ‘all-stock merger’, would be more neutral.
The lowest risk scenaio he sees is WBD acquiring Redstone’s National Amusements (NAI), Paramount’s parent company. Cahall says:
“This gives management options, such as divestitures, prior to an all-stock merger of WBD/Paramount B (stock). We see this as the lowest risk (i.e., best) option for WBD (smaller outlay). This also gives NAI immediate cash so may be most probable.”
He adds: “Any deals will likely require significant regulatory approvals of one to two years.”
Fellow TD Cowen analyst Doug Creutz agrees, saying in his report he doesn’t see it likely passing regulatory approval:
“We have a very hard time believing the current FTC/DOJ, which has been very aggressive in combating industry consolidation, would give this deal a pass… Ultimately, we think such a deal would be a mistake for WBD.”
Creutz suggests an alternative: “What might make more sense would be an agreement to bundle Max and Paramount+ together as a single product, while remaining separate companies.”
For plenty more analyst takes on the deal, head on over to THR.
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