Netflix Falls on Report It's Leading Bidder for Warner Bros.

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Watch Netflix Falls on Report It's Leading Bidder for Warner Bros. - Bloomberg on Dailymotion

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00:00Then there's Paramount, Skydance, and Warner Brothers Discovery.

00:03Both are trading lower this morning.

00:06Warner Brothers down 2%, Skydance also down 2%.

00:09With Paramount raising its breakup fee to $5 billion in its bid for the company,

00:14that in itself is a sign that it can clear regulatory hurdles.

00:18That's also happening with recent reports that Netflix is the lead bidder for the company.

00:23Bloomberg Intelligence analyst Kevin Neer joins us now with the latest.

00:27Kevin, let's start with this idea that Netflix is in the lead.

00:30And you saw shares turn negative as soon as that report came out.

00:34It feels like no one really wants Netflix to buy this company.

00:37Yeah, absolutely, Danny.

00:39I think that you outlined it correctly.

00:41I mean, the Warner Brothers Discovery, M&A saga just continues to dominate the broader media ecosystem.

00:47And as far as who is in the lead, we continue to see these little inklings dribbling out.

00:52But, you know, we're hearing now that Netflix is upping its bid to 85% cash.

00:57But I think that now the concern is, you know, is this price getting too high?

01:01I mean, David Zaslav says he all along always wanted a bidding war, of course.

01:04Good for his shareholders.

01:06But now the question is, you know, where will the financing come from?

01:08And is, you know, the price just getting too high?

01:09OK, well, what's better then for Warner Brothers Discovery?

01:12Cold hard cash of Netflix being like, hey, we have the most attractive bid versus a Paramount that's like,

01:17well, we won't need to break you up.

01:18Maybe the regulatory hurdles are a little bit more easy with us.

01:22Is that enough to convince them to come over to Paramount despite the maybe higher price tag that they could get from Netflix?

01:28Yeah, it's a great question.

01:29I think that's exactly what they're trying to mull right now at the board level.

01:32You know, with the antitrust concerns, as you bring up, I mean, with all of these three reported bidders,

01:37there's overlapping businesses, right?

01:38So it's not a clear cut, you know, flying through by any means.

01:42But to your point, we do think that, and our antitrust litigation analysts have written about this,

01:47we do think that Paramount is the best case from an antitrust perspective, you know,

01:51and that's, you know, largely due to just the management team's relationship with the administration, right?

01:56So in terms of the antitrust, we do think that Paramount has a little bit more of an edge there,

02:01whereas Netflix, given that they're going after the studio and the streaming assets,

02:05just the size of how big Netflix is globally,

02:07if you have Max is now very scaled up globally as well,

02:09that could potentially cause some hurdles, not just in America, but elsewhere as well.

02:13It'd be super interesting to see if Netflix would start to put movies in theaters.

02:16And just on that note, you have some really good research out with your view into 2026,

02:20what the box office is going to look like.

02:21It's been so chronically under pre-pandemic levels.

02:25Will we get anything close to back to it?

02:27Yeah, unfortunately, it's seeming like it's just still a little bit more stop and start.

02:31On the supply side for the box office, it does look like it's going to be better next year.

02:34We have Amazon MGM who are releasing their full slate, if you will,

02:38of movies going from four to nine or so.

02:41And so from the supply side, it does look good, but now we're concerned about demand, right?

02:45And we're looking at pre-sale tracking for Avatar, Fire, and Ash that's coming up at the end of the month.

02:49That is a little bit softer than we anticipated,

02:51so maybe consumers are allocating their budgets a little bit differently with holiday shopping coming up.

02:56We don't know, right?

02:57So it's going to depend on the health of the economy.

02:59There are some big movies coming up next year.

03:01Are any of them not sequels? Are any of them new movies?

03:03It's a very IP-heavy slate.

03:04I will say we're seeing a rebound in animation, which we think is a positive.

03:08But ultimately, we would like to see maybe a little bit more of a mix in original titles

03:12and different sizes of budgets.

03:15Because ultimately, going back to the theaters, which you've seen a lot of pressure on that,

03:18taking it back to this whole Warner Brothers question,

03:21for the theaters especially, you want to see a little bit more of a spread out box office

03:25so you don't have as much pressure on the profit line.

03:27We'll see you next time.

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