The Warner Discovery Bidding War Is Heating Up. Who Stands to Win.

Paramount Skydance CEO David Ellison (far left) appeared ringside at the Ultimate Fighting Championship with President Donald Trump in April. (Joe Raedle/Getty Images)

Key Points

• Paramount, Netflix, and Comcast are preparing bids for Warner Bros. Discovery, with a deadline for nonbinding offers on Thursday.
• Paramount is considered a strong contender due to its close ties with the Trump administration and financial backing from Oracle founder Larry Ellison.
• Warner Bros. Discovery’s stock has increased 103% over the past three months, trading at $23.69 as of Tuesday’s close.

If the company he keeps is anything to go by, then David Ellison is probably best placed to win the race for Warner Bros. Discovery. Paramount Skydance’s CEO attended a high-profile White House banquet for Saudi Crown Prince Mohammed bin Salman on Tuesday, the latest reminder of his family’s strong relationship with the Trump administration.

Thursday marks the deadline for any interested parties to submit first-round, nonbinding bids for the entertainment company, according to a report from The Wall Street Journal last week that cited people familiar with the matter. Whoever wins will walk away with the rights to beloved characters including Harry Potter, Superman, and Tony Soprano.

Paramount , Netflix , and Comcast are all preparing offers, according to The Journal’s report.

Paramount looks best placed to win the bidding war: It has the strongest relationship with the Trump administration, potentially smoothing the process of regulatory approval. At the same time, it can rely on billions of dollars in cash from CEO Ellison’s father, Oracle founder Larry Ellison, to get the deal done.

Created with Highcharts 9.0.1Warner Bros. Discovery stockSource: FactSet

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Warner Discovery has rejected three offers from Paramount, the Journal reported last month. The highest of those valued the company at $23.50 a share. Warner Discovery’s stock, which has climbed 103% over the past three months in response to excitement about a potential takeover, was trading at $23.69 as of Tuesday’s close.

Paramount on Tuesday denied a report from Variety that it was forming an investment consortium with three Middle East sovereign-wealth funds to submit a bid. “The information Variety published is categorically inaccurate,” it told Barron’s, declining to comment further.

As David Ellison’s attendance at the White House banquet illustrates, he and his father have a close relationship with the White House. He was spotted ringside with President Donald Trump, Tesla CEO Elon Musk, and several Trump administration officials at a United Fighting Championship event in April, months before the Federal Communications Commission approved Skydance’s merger with Paramount.

Larry Ellison is a close ally of Trump. He is involved in initiatives including the Stargate artificial-intelligence infrastructure project and the search for a buyer for the Chinese video-sharing app TikTok.

“The path of least resistance for success would probably be Paramount Skydance,” Seaport Research Partners analyst David Joyce told Barron’s. “It seems like they have the regulatory review locked up, given their visibility with the Trump’s administration.”

He rates Warner Discovery at a Buy with a price target of $24, but is Neutral on Paramount.

Joyce thinks Paramount would likely end up paying at least $27 a share. His financial model assigns Warner Discovery’s studios, streaming, and TV networks segments respective enterprise values of 12 times, 15 times, and 5.5 times earnings before interest, taxes, depreciation, and amortization.

Created with Highcharts 9.0.1Source: FactSet

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Netflix and Comcast are only interested in the streaming and studios businesses, according to The Journal. Neither company responded to a request for comment from Barron’s about potential bids for the studios and streaming business.

It’s less likely that Warner Discovery’s board would accept such an offer, which would leave it trying to find another bidder for its legacy TV networks, Joyce said. The company’s legacy network stable includes CNN, TNT and Discovery Channel, but revenue for the segment has plunged as customers pivot to streaming and advertisers rein in spending.

Both Netflix and Comcast have also faced backlash from Trump and his allies this year, which might make it tougher to win regulatory approval. Musk and other conservatives slammed Netflix last month for what they saw as the pro-transgender messaging of its animated children’s show Dead End: Paranormal Park. Trump has repeatedly criticized Comcast’s NBC and the liberal cable channel MS NOW, formerly known as MSNBC.

Comcast may also find it tough to pull off a deal considering it is in the process of spinning off most of its own cable networks into a new, publicly traded company called Versant. The company expects to complete that transaction in January.

Three of the world’s biggest media companies are going head-to-head for Warner Discovery, but this isn’t just about the size of the potential bids. With Trump in its corner, Paramount Skydance should be a heavy favorite to get the deal done.

Write to George Glover at george.glover@dowjones.com