Paramount Skydance is preparing a bid for Warner Bros. Discovery: Here's what to know

Potential Acquisition of Warner Brothers - Paramount is reportedly preparing a bid to acquire Warner Brothers, with the bid potentially arriving as soon as next week [1][2] - The bid is expected to be largely or entirely in cash, as the Warner Brothers board is unlikely to favor a deal heavily weighted in Paramount stock [3][4] - A bid in the low 20s (presumably USD per share) comprised largely of cash could attract the Warner Brothers board's attention [4] Financial Considerations - Both Paramount and Warner Brothers are highly leveraged, with leverage ratios exceeding three times [5] - To finance an all-cash bid, Paramount would likely need a significant cash infusion, potentially from Larry Ellison and partners like RedBird, which could dilute Paramount shareholders [6][7] - Cost synergies resulting from a merger between Paramount and Warner Brothers could allow for additional leverage, despite both companies already being over three times leveraged [17] Strategic Implications - Warner Brothers is moving forward with a split into its global networks business (owning 20% of the other part of the business) and its streaming/studio business, expected around April of next year [7][8] - Paramount may be moving quickly to make a bid before the split, to avoid competition from larger tech companies like Netflix, Apple, and Amazon for the streaming/studio assets [11] - If Warner Brothers receives a bid from Paramount, it may need to solicit offers from other potential buyers like Netflix, Apple, and Amazon to ensure it is maximizing shareholder value [9] Regulatory and Competitive Landscape - Regulatory approval is expected if Paramount makes an offer accepted by the Warner Brothers board [23] - Comcast is unlikely to bid for Paramount while spinning off its cable networks [24]