00:00 Speaker A

Well, the bidding war is in full swing for Warner Brothers Discovery’s assets. Tensions rising as Netflix, Paramount, and Comcast submit second round bids. Business Insider chief correspondent Peter Kafka joining me now to discuss. Peter, it is great to see you. So, the drama does continue, Peter. We got a lot of a lot of headlines, cross-currents. Let’s start here. Uh, my old colleague, CNBC’s Alex Sherman, great reporter that he is, posting on X. He says here, Bombshell news in the WBD process. Alex says,

00:39 Speaker A

Paramount lawyers have sent a letter questioning Warner Brothers Discovery sale process. You saw that, Peter. What do you make of that?

00:54 Peter Kafka

Um, that is, I think, uh a letter that’s saber rattling is what we used to call it. Uh, that’s Paramount saying, we really, really want to do this deal and if for whatever reason we don’t get this deal, if the Warner Brothers board decides they want to sell some of the company to Netflix instead of all of it to us, we’re going to go after them. We are either going to uh make their life difficult in court. Uh, we think we have the government on our side on that and or we’re going to go right to shareholders and try to do a hostile takeover. Right now, we’re we’re playing by the rules, but

01:34 Peter Kafka

but um, you can also read that as a sign of potential weakness that they feel Netflix may actually have the edge on them right now and they’re trying to dissuade Warner, the Warner Brothers board from going with Netflix. You can look at it as a either a sign of strength, uh, or a sign of weakness, or maybe both.

01:52 Speaker A

Do you think this does that delay the the sale, Peter? Because you you saw, I mean there were these reports that WBD wanted to to pick a winner soon, maybe by by next week. I mean, when you see something like that, does that sound still realistic?

02:08 Peter Kafka

I I mean, Warner Brothers can make a decision whenever they want. They can also say, we’ve decided to wait longer. There’s no real reason for them to have to do anything one way or the other, other except I think they’d all like to go home for the holidays. Um, I would imagine they’re going to come out with some decision uh in the next few days, uh again, by the end of this month. That doesn’t mean the deal will be done, particularly if Paramount doesn’t get the deal. I think they, what they are signaling is, even if you pick someone who isn’t us, we are going to continue this process into next year.

02:44 Speaker A

City, by the way, uh Peter, they called WBD, they said it was a must have for Paramount. I guess one, do you agree with that, Peter? Is it a must-have? And two, so so what happens, I guess if it didn’t happen for Paramount?

03:07 Peter Kafka

I mean, what everyone has agreed on for many years is that the winners of the streaming, the winner of the streaming war is Netflix and that the remaining winners will be some combination of Apple and Amazon and maybe Disney, and then everyone else including Warner Brothers Discovery and definitely Paramount are subscale and the conventional wisdom was there was going to be consolidation among these smaller players, and we were just waiting to see what would happen. When Warner Brothers Discovery was first put together, the company sort of suggested they wanted to be acquirers, but they would also look at being a seller. So, similar for Paramount. Um, when Larry and David Ellison bought Paramount, they spent about $8 billion on it. They suggested they were going to sort of spend a lot of money bulking it up, but no one thought that would be enough on its own. So,

04:10 Peter Kafka

however it shakes out, we expect to see more combinations down the road.