In the thrilling arena of Hollywood power plays, David Zaslav stands at a crossroads that could redefine the future of blockbuster entertainment—sell Warner Bros. Discovery to a rival or tear it apart? The stakes have never been higher, and the drama is just unfolding.
Ever since media titan John Malone convinced David Zaslav to ditch his role at NBC and step into the CEO seat at Discovery Communications, Zaslav has built his reputation on savvy business moves. He snapped up Scripps Networks to forge a powerhouse focused on reality TV and lifestyle content, and he clinched the WarnerMedia merger through a casual golf chat with AT&T's John Stankey.
But here's where it gets controversial: The coming months promise to test Zaslav like never before, as he ponders his most impactful decision yet—should he cash out or divide the empire?
Paramount's CEO, David Ellison, hasn't hidden his appetite for Warner Bros. Discovery in hushed talks with industry heavyweights. His initial bid of $20 per share was swiftly rebuffed by WBD, as Bloomberg revealed last weekend. Ellison, possibly gearing up with a heftier offer—maybe bolstered by his father Larry Ellison or an investor like Apollo—is expected to make another run. According to The Wall Street Journal, he might even bypass the company and appeal straight to WBD shareholders if negotiations stall. While he cites regulatory hurdles as a reason (arguing Paramount's stronger position could dodge scrutiny from a potential Trump-led administration), the lure of cold, hard cash often trumps such concerns.
To put this in simpler terms for beginners, antitrust regulations are like rules set by the government to prevent huge companies from dominating markets and hurting competition. Ellison is betting that combining Paramount with WBD would face less pushback, perhaps because Paramount has a cleaner track record or fewer overlapping assets.
Still, Ellison has been vocal about pursuing major transactions. At last week's Bloomberg Screentime conference, he shared, “Ironically, it was David Zaslav who pointed out last year that media consolidation matters. Our approach always prioritizes benefiting creators, investors through value growth, and the art of storytelling overall.” He added, “When considering any purchase—and there are plenty of feasible opportunities soon—we focus on expansion, not reduction. More content spurs greater audience interaction.”
And this is the part most people miss: Ellison aims to acquire Warner Bros. Discovery before Zaslav can pull off his alternative strategy—a company breakup. This would carve WBD into two entities: one led by Zaslav, encompassing HBO and Warner Bros. studios, and another headed by Gunnar Weidenfels, merging the old Discovery networks with some debt and a share in the studios.
For those new to corporate maneuvers, a company split (or spin-off) is like dividing a large family business into smaller, specialized outfits to boost efficiency and attract buyers. It's similar to how tech giants like Google (now Alphabet) have spun off units to focus on specific areas, potentially increasing their market value.
The planned division, slated for April, is designed to liberate hidden worth, as Zaslav and WBD leaders explain. A debt-free studios and HBO unit, free from traditional TV networks, would allure suitors, while the Discovery segment (featuring CNN) opens doors to various paths—pure cash flow generation, bundling with others, gradual asset sales, reinvestment in brands, or even a full buyout by private equity firms. Bank of America analyst Jessica Reif-Ehrlich, who championed this idea last year, likens it to a vast menu of choices, like at a Cheesecake Factory.
She also hails the post-split Warner Bros. entity as a 'crown jewel,' capable of igniting a frenzy among bidders. In her September 30 note, after Ellison's intentions surfaced, she wrote, “We believe separating WBD's streaming and studio holdings would trigger competitive offers, maximizing value.”
WBD insiders seem to echo this optimism, perhaps wagering that even after the split, Ellison and Paramount would remain interested, alongside giants like Apple, Netflix, Comcast, or Sony.
But is this enthusiasm justified, or just a clever illusion as Ellison might claim? Netflix co-CEO Greg Peters, queried about a Warner Bros. tie-up, largely pooh-poohed it. “We're rooted in creating, not acquiring. Plus, past big media mergers haven't exactly set the world on fire,” he remarked, though he left room by saying, “It's our duty to explore every avenue.”
Lightshed's analyst Rich Greenfield shares this doubt regarding Netflix. In his October 6 piece, he noted, “Sure, Warner Bros. has intellectual property Netflix could repurpose, and licensed Hollywood films like Despicable Me 3 thrive on the platform, but Netflix's growth stems from original creations. Moreover, studios are eager to license to us, so why buy?”
Whatever unfolds soon, Warner Bros. Discovery is undeniably at a turning point. Ellison might swoop in for a blockbuster deal, folding the legendary studio into Skydance, or Zaslav could proceed with the split and gauge market response.
This iconic Hollywood institution could end up under another studio's wing, snapped up by a tech behemoth, or standing solo. Ellison waits patiently. But who else is lurking?
What do you think—should Zaslav sell out for quick gains, or risk the split to unlock true value? Is consolidation the savior of storytelling, or a recipe for mediocrity? Share your take in the comments; do you side with Ellison's bold vision or Peters' cautious approach?
