Will The Bobs pay a visit to Atlanta? Perhaps CNN personnel had better start counting their pieces of flair, so to speak.
After David Ellison bought Paramount and The Free Press, he put Bari Weiss in charge of CBS News. Rumors had Ellison interested in acquiring Warner Bros Discovery next, which has CNN among its assets. The synergy between CBS News and CNN would potentially lift the Paramount news organization ahead of those of the broadcast networks with which CBS primarily competes.
Today, the rumors turned into fact. Warner Bros Discovery (WBD) put itself up for bids:
Warner Bros. Discovery said Tuesday it’s expanding its strategic review of the business and is open to a sale, sending shares of the company 10% higher in morning trading.
Earlier this year, WBD announced plans to split into two separate entities, a streaming and studios business and a global networks business. It’s also been fielding takeout interest from the newly merged Paramount Skydance
But on Tuesday, WBD said it’s received “unsolicited interest” from multiple parties and will now review all options. The company said it’s still moving toward the previously announced separation in the meantime.
So far, though, WBD has played hard to get with Ellison and Paramount/Skydance:
Paramount recently made a second offer for the company, according to people familiar with the matter. Warner rejected it this week, one of the people said. ...
Warner Discovery received a first bid for the entire company from Paramount last month and rebuffed it, The Wall Street Journal previously reported. After that, David Ellison, the son of billionaire Larry Ellison and chief executive of Paramount, made the second offer.
Perhaps the third time will be the charm?
The question, though, is what exactly is on the chopping block. WBD CEO David Zaslav has already decided to split the business into two entities. The WSJ reports that one entity would include its studios, production facilities, HBO, and other entertainment streaming. The latter apparently does not include CNN, which would hardly be described as entertainment, and only occasionally as news. CNN would get folded into a "global networks" entity that also includes its other cable channels and the entire Discovery TV package.
From the reporting at WSJ, though, it sounds as though Zaslav wants to sell off the studio and production side of the business to focus on its "global networks." That means that Zaslav would keep CNN and the other cable channels instead, which means that Weiss may not get to work her magic. For those wondering why WBD would choose to sell off what seems to be a more robust and expandable business to focus on TV, remember how Zaslav got here in the first place. CNBC reminds readers:
WBD has faced mounting financial challenges since the 2022 merger of WarnerMedia and Discovery Inc., which saddled the company with more than $40 billion in debt. It has since undertaken aggressive cost cutting, restructured its content pipeline and focused on profitable franchises like “Harry Potter” and “Game of Thrones” spinoffs.
Though the company has made progress in debt reduction, investors have remained skeptical in part because of the company’s cable network portfolio as consumers move toward streaming.
In other words, Zaslav bit off more than he could chew, a worry that arose at the time of the acquisition. Creditors still haven't been satisfied with debt service as of yet, apparently, and Zaslav needs to generate a large amount of capital to right-size WBD debt. The studio-production side of the business can generate far more capital than its still-valuable "global networks" business, or so it seems.
With that in mind, Ellison's interest seems clear. He has similar assets at Paramount, but he can merge with WBD's studio-production assets and streamline operations. Acquiring the franchises that still work will boost Paramount's ability to rain cash down the road too, while CBS and especially CBS News will cost more than it generates for a while. That model also has attracted interest from others, reportedly Netflix among them, for obvious reasons.
For better or worse, Bari won't get a shot at CNN, at least not for now. However, one has to wonder just how attached Zaslav is to the only news outlet in his constellation, and whether it would make sense to sell it off for cash as a separate deal. Zaslav needs the capital, and CNN doesn't have much upside as a subscription service -- as it proved a couple of years ago, and apparently is attempting again these days. It therefore doesn't fit well within the Discovery channels that do generate viewer loyalty and subscriptions, and the content fits even worse. Ellison might take an interest in a smaller acquisition to give CBS News its own 24/7 cable service and create efficiencies and synergies under Weiss. Ellison's decision to acquire The Free Press separately from his purchase of Paramount shows a strong commitment to expanding and reforming his news product -- and buying CNN might make a lot of sense.
So keep The Bobs on standby. What do you say you do here?
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