Another week, another offer by Skydance to buy Warner Bros. rejected. Two actually, if sources are correct. The issue is relatively straightforward. Or as straightforward as anything in television gets. Skydance, fresh from its purchase of Paramount, now wants to buy Warner Bros. All of Warner Bros. But Warner CEO Dave Zaslav thinks he can get more money by splitting the company in two and selling it to potential suitors like Netflix, Comcast and Amazon. The whole being less than the sum of the parts. And/or he thinks that given that, he can ultimately squeeze more money out of Ellison fils that way. Regardless, most of the industry expects him to sell. Why It Matters There’s been a dawning realization among the moguls of the legacy media companies that they can no longer do this on their own. That, as many observers have noted for some time, their real competition is not each other, but rather the tech behemoths, notably Google and Amazon, with Apple, Meta and even Microsoft and Nvidia waiting in the wings. As a result, the conventional wisdom has been that they need to join forces to actually have a shot at survival. If that strikes you as an overreaction, bear in mind that the reality is that the tech companies not only have billions of dollars at their disposal, but also a global presence at a time when the industry has become decidedly global. Yes, there are a handful of MTV and HBO outposts around the world, but that’s not the same thing as Netflix having a presence in every country on earth save North Korea, Syria and China. And YouTube doesn’t even need to plant its flag anywhere: the app is available worldwide, along with most of its content. So then the question becomes which deal nets Warner’s shareholders the most money? Zaslav’s plan has been to split the company in two: he would remain head of a company that included its well-regarded TV and movie studios as well as the recently renamed HBO Max streaming service. Meanwhile, the company’s cable assets—CNN, Discovery, TNT and the like would go into a new company run by current CFO Gunnar Wiedenfels. This is more or less exactly what Comcast just did in spinning off its own cable networks into a new company known as Versant. The theory is two-fold: On the one hand, the streaming services will not be bogged down by having to worry that their success comes at the expense of their cable networks. On the other, it’s widely assumed that the streaming services are appreciating assets while the cable networks are depreciating assets. Of the sort that private equity firms love to buy and squeeze every last penny out of. The conventional wisdom has been that HBO Max, with its stellar reputation and penchant for highbrow hits, would be a nice feather in any company’s cap, a feather that would be nicely complemented by the studios’ deep library of much-loved hits. The cable networks, the theory went, would either be sold off as a group, or individually to buyers who wanted to supplement an existing offering. Skydance’s plan seemed to throw everyone for a loop, but on paper it does make sense for Paramount. Adding all the Warner cable networks would make it the go-to cable player, and I’ve even heard speculation that CBS News would be merged into/replace CNN, the theory there being that the latter’s reputation is beyond salvage, but that CBS is still a trusted name that can take advantage of CNN’s massive national and international reach. Maybe. What You Need To Do About It If you are Warner, definitely hold out for the best deal. It’s not as if you won’t have the same strongly interested suitors if you wait a few months. The key will be how you play them off against each other to get the best price, how much truth there is to rumors that Amazon and Comcast are also interested. Or interested enough to make an actual offer, anyway. Versus, you know, just leaking things to the Wall Street Journal and Axios. I would say you might face regulatory hurdles, but the current administration seems genuinely unconcerned about that, especially if you make sure to stay on their good side. (Well, if you are going to sell to Paramount anyway, it seems, though these things frequently change.) If you are Paramount, you should definitely come back with further offers. It’s only 10 PM at the Disco Bros disco and the night is still full of possibilities. But wait until 1 a.m. and you’re going to start looking a whole lot more attractive. The deal makes sense for you (I’ll assume you’ve run the numbers and they add up) so just be patient. If you’re one of the other suitors—Netflix and Amazon in particular—getting HBO and the studios is something to think about. Just remember that programming is an art, not a science and that while HBO has managed to hold on to its culture and its ability to create buzzed-about hits, that culture will need to be nurtured. Which brings me to Apple. I get that you haven’t figured out what you want AppleTV to be. Other than a company without a “+”. But HBO’s programming seems well-aligned with yours, plus you get the whole movie library, something you are desperately lacking. You’ve got the money and well, this sort of deal seems to be a once-in-a-lifetime kind of thing. I mean it’s not like the British government is going to sell you the BBC. Something to think about. |
