What a week for Warner Bros. Discovery, whose stock soared Thursday based on reports that the newly Skydance Media-powered Paramount plans to make a play for the iconic studio. So much to break down: Wall Street has been buoyed by renewed enthusiasm over artificial intelligence that added roughly $100 billion to Larry Ellison’s wealth after his cloud server giant Oracle inked a $300 billion deal with OpenAI and announced other AI-fueled cloud contracts, blowing away forecast expectations. As we all know, his son David owns Skydance’s Paramount, so theoretically he could ask dad for less than half of what he made on paper in one day following this week’s OpenAI deal to easily buy WBD, even at a premium over its new roughly $46 billion market cap following a huge run-up on WBD shares based on the rumors. (No, we’re not factoring in WBD’s $35.6 billion in gross debt as of the end of Q2, but parties have myriad ways to deal with that.) Meanwhile, all of this comes amid a general stock surge this week after core inflation came in as expected and bolstered the chance of an interest rate cut by the Federal Reserve next week. Experts expect a quarter-point cut, but the Fed could choose to go with a half-point move as a “catch up” after waiting too long (according to some critics including President Trump) to ease rates. Either way, the market will likely continue rising short term, which may put even more pressure on Paramount to make an offer before valuations go higher. But again, David Ellison’s access to capital just got a boost through his father, although we have no idea how much the elder Ellison would be willing to front for a WBD acquisition at this point.
Whatever happens, WBD is at an important crossroads. Even before this week’s merger rumors, the company had already shaken things up by announcing in early June that it will split into two separately traded entities that have since been named Warner Bros. (the studio and streaming) and Discovery Global (cable assets). That process is expected to conclude in April 2026, although it’s unclear whether Paramount – if successful in striking a deal to take over WBD – would keep those plans in place post-takeover. Perhaps not, considering that one of Skydance leadership’s first disclosures after buying Paramount was that the newly merged company would not follow the leads of WBD and first-mover NBCUniversal by splitting off the cable assets. Instead, Ellison and his right hand man, industry veteran Jeff Shell, plan to leverage those brands in a more modern way across streaming and other entertainment platforms. So would Paramount want to also keep those Discovery nets not only to strengthen its powerful portfolio and bargaining position with MVPDs but to similarly leverage those brands in new ways? And if so, would it even potentially use its considerable familial resources to then make a play for NBCU’s planned Versant venture, which will house most of NBCU’s traditional TV nets aside from the NBC broadcast net, Telemundo, and Bravo?
Perhaps, but while such a scenario remains plausible theoretically, it could also run into regulatory hurdles because of the concentration of networks under one roof, with distributors imploring antitrust authorities to step in – even before any potential Versant play. But even if Paramount was allowed to own so many cable assets, the larger question is whether it would really make sense with the linear TV business in secular decline. However, Ellison seems to see things a little differently than most and may be betting that cord cutting eventually levels off. After all, Charter’s quarterly metrics already show evidence that its strategy of offering free streaming services for its best video customers, along with smart bundling of mobile services, has put it in a much better position than most of its peers. If cord cutting does level off or even reverse at some point, it doesn’t need to (nor will it ever) recapture its glory days of 100 million linear TV homes to still remain a wonderfully cash-drenched business for years to come. That may be an overly rosy scenario, but it’s one that Ellison may find more compelling when he considers the possibilities to monetize all that IP across multiple platforms, perhaps leveraging AI and AI-related licensing opportunities to extract at least some of that value. For WBD, it may be all upside as any deal with Paramount would help it scale considerably – something that could be an issue post-Discovery Global split as it would be significantly smaller than many of its Silicon Valley peers, or for that matter, Comcast NBCU and Disney. And also this week, WBD CEO David Zaslav said at the Goldman Sachs conference that the company not only will soon crack down on password sharing but probably pair that with HBO Max price hikes. That means even more revenue to bolster the balance sheet and help pay off debt.
Next? Of course, let’s not get ahead of ourselves. Paramount hasn’t even commented. And furthermore, several other entities might line up to counter any potential bid with their own offers that could up the price (probably another reason WBD’s stock rose so much this week). Comcast has long been rumored to have interest in WBD to bolster its own NBCU holdings and even has some close integrations with WBD IP such as its global network of “Wizarding World of Harry Potter”-
themed lands at its parks in Florida, Los Angeles, China, and Japan. And who is to say that Amazon or even Netflix might sniff around, although Amazon seems more likely based on its previous willingness to buy MGM and Netflix execs’ constant denial that they want to buy any traditional studio assets. It’s a fun week to speculate, but no one knows what will happen. The $13 billion run-up in WBD’s market cap over two days may even scare off the Ellison family, which likely wasn’t banking on the news leaking in advance of its supposed offer. In the meantime, the world moves on as if business as usual, whether it’s Zaslav’s comments about those planned price hikes or this week’s additional news that WBD will join Disney in suing EchoStar’s Dish and Sling TV over their “day pass” concept that lets people buy short-term access to virtual MVPD packages. WBD also announced last week that it’s planning a TNT Sports app in the wake of Disney and Fox launching their ESPN and Fox One apps on August 21 and then announcing they would bundle them in early October (a.k.a. Venu Sans WBD). Expect considerable intrigue over the next few weeks if we don’t learn something sooner – although it’s perhaps just as possible that none of this pans out. Keeping track might require some dark magic, but that’s why we have that Wizarding World to fall back upon.
