Paramount Warner Bros. Discovery hostile bid has a catch for cable networks

Verbal meme: Leonardo DiCaprio pointing astatine the TV — "Succession" fans volition admit the latest crook successful the Warner Bros. Discovery (WBD) acquisition saga.

This Monday, Dec. 8, David Ellison and Paramount (PSKY) "went hostile" successful effect to WBD's rejection of its $30/share connection successful favour of Netflix's (NFLX) $27.75/share and banal connection precocious past week.

Paramount began bidding successful absorption to Netflix's exclusive dialog with a tender bid of $108 billion, Bloomberg reported. Warner Bros. has 10 days to respond to the submission of the offer, aft which Paramount volition marque its overtures straight to WBD shareholders with the enactment to widen its connection model astatine the 20-day mark, per CNBC.

While a assortment of aspects including the timeline, financing, and antitrust dimensions to this woody volition each beryllium mulled implicit endlessly, the valuation tug-of-war implicit Warner Bros. Discovery's linear cablegram assets has go singularly crucial.

These assets person go integral to an grade connected par with the comparative financing and precise good whitethorn plaything the full shebang 1 mode oregon the other.

Having written astatine magnitude connected the Netflix-Warner Bros. deal's plans for these cablegram assets, I'm well-positioned to measurement some proposals and explicate what's being missed.

Here's wherever the destiny of "WBD Global" (as the cablegram assets bundle is referred to internally astatine WBD) presently stands.

David Ellison appeared connected CNBC's (CMCSA) "Squawk Box" and straight conveyed his feelings connected WBD's cablegram assets.

Related: Netflix softly drops Warner Bros. Discovery cablegram channels successful sale

"The crushed wherefore we judge fundamentally successful this operation is precise simply, by putting the originative contented engines of the companies together, we judge we tin triumph successful content. We’d person an IP portfolio that’s competitory with Disney by putting Paramount and Warner Bros. together," Ellison said connected CNBC Dec. 8.

"When you look astatine the linear portfolio, determination are important synergies. And erstwhile you look astatine what we tin bash with CBS, which is simply a crown jewel asset, each linear is not equivalent."

It's assured talk, and the thought that Paramount could simply bash much with linear cablegram assets than Netflix is convincing, fixed that they are already successful the quality concern with CBS. Fascinatingly, Ellison and Paramount's debased comparative valuation of the assets complicates this narrative.

If you're playing catch-up here, determination is accrued absorption connected the destiny of Warner Bros. Discovery's cablegram assets (CNN, TNT, Discovery, and more) due to the fact that Paramount is consenting to bargain said assets (aka Warner Bros. Discovery wholesale), whereas Netflix wants to acquisition lone Warner Bros. Streaming and Studios, asking Warner Bros. to rotation disconnected its linear cablegram web properties into a abstracted entity beforehand.