Warner Bros. Discovery continues to have a "For Sale" sign on its front door as multiple suitors seemingly gear up to place their bids for the studio. The top choice to merge with the company has so far been David Ellison's Paramount Skydance. The company has placed multiple bids with increasing benefits to sweeten the deal for WBD. All offers have been rejected so far, but it's generally assumed that Paramount will be the ultimate victor... well, until now.
In a somewhat surprising (but not totally unexpected) turn of events, David Ellison has now cast doubt on his company's interest in Warner Bros. Discovery. During a recent earnings call (via The Wrap), the CEO stated there are no "must-haves" for Paramount, and that the company is willing to build to reach its goals:
"It's important to know that there's no must-haves for us—we really look at this as buy versus build, and we absolutely have the ability to build to get to where we want to go."
Ellison then stated that Paramount can achieve success on its own terms: "We believe we can achieve our goals with our creative content engines. We believe we can achieve our streaming goals and that we can drive enterprise efficiency [...] and create value and longterm free cash-flow generation all through [...] building."
Further casting doubt on the potential merger, the Paramount CEO said that the company is in a position to be "opportunistic" when it comes to mergers and acquisitions:
"As it relates to M&A, everything for us is going to tie back to: Does it accelerate those three core principles? We're fortunate that we have the balance sheet to be able to be opportunistic when we think that M&A will accelerate our goals, but we're also long-term-disciplined owner-operators."
Ellison's comments are significant, and they point to two distinct, yet equally major, possibilities. The first possibility is that Ellison is truly considering Warner Bros. Discovery isn't necessary for Paramount to reach the heights he seemingly believes it's capable of reaching.
The second one, and perhaps the most likely of the two: He may be, in simple terms, playing "hard to get" publicly, in order to build urgency within WBD for the board to get back to the negotiating table.
The latter seems more likely given the high interest Paramount has shown in WBD since acquiring it became a possibility, evident by its escalating offers, which included making David Zaslav co-CEO of a merged WBD-Paramount. Furthermore, most recently, it was revealed that, if Warner Bros. Discovery remained silent on its offers, Paramount would consider making what's known as a hostile bid to shareholders; this in order to convince them that selling to the company would result in the most ideal financial outcome.
What either of these two outcomes will lead to remains to be seen. However, there are some possibilities to consider. On one hand, if Ellison's comments spur Warner Bros. back to negotiating with Paramount (and assuming Ellison is, indeed, playing hard to get), there could be some compromises—perhaps even some considerable ones—from both sides during the negotiation process to reach an agreement.
Then, as unlikely as it may be, if Ellison truly wishes to no longer engage in negotiations with the studio, parties like Netflix or Comcast could come in and offer an enticing enough deal for WBD to accept a sale with whichever one of the two places the winning bid.