According to Reuters, Paramount Skydance gained fresh ammunition for its $108.4 billion hostile bid for Warner Bros Discovery by pointing to the market’s response to Comcast’s recent spin-off. Comcast hived off assets like CNBC into a new company, Versant Media, which started trading on Monday, January 7th. Paramount argues Versant is a proxy for Warner’s own planned spin-off, Discovery Global, which includes CNN and TNT Sports. Applying Versant’s trading multiple of about 4-times estimated earnings to Discovery Global suggests a value of less than $2 per share. When combined with Netflix’s separate $82.7 billion deal for the rest of Warner Bros, Paramount calculates the total return for shareholders is less than its own $30 per share all-cash offer. Warner’s board unanimously rejected Paramount’s latest bid last Wednesday, calling it a risky leveraged buyout.
The Spin-Off Squabble
Here’s the core of this messy, billion-dollar food fight. Paramount is basically telling Warner Bros Discovery shareholders, “Look at what just happened with Comcast.” Versant Media, the spun-off entity, is trading at a pretty low multiple. And Paramount’s whole argument is that Warner’s own spin-off, Discovery Global, is going to get the same cold shoulder from the market. Their math, backed by Reuters’ own calculations, paints a stark picture: that chunk of the business might be worth less than two bucks a share. That’s a powerful, scary number to wave in front of investors who are already nervous.
Warner Bros’ Defense
But Warner Bros isn’t just taking this lying down. Their rebuttal is, “We’re not them.” They argue Discovery Global has way more scale, profitability, and crucially, owns massive sports rights and a real streaming service in Discovery+. That’s a fundamentally different asset than what’s in Versant. They also have a point about Versant’s stock being artificially depressed because it got kicked out of the S&P 500 index. And then there’s the bigger strategic vision. Some analysts, like Richard Greenfield, call the comparison a “false equivalence.” The thinking is Discovery Global isn’t meant to languish as a standalone public company; it’s being positioned for a sale or breakup that could “unlock significant value.” So, is Paramount using a flawed comparison? Or is it revealing an uncomfortable truth the board doesn’t want to face?
The Shareholder Pressure Cooker
Now, this isn’t just a war of words between two corporate boards. The real pressure is coming from the money people. Warner’s seventh-largest shareholder, Penwater Capital, has already publicly called Paramount’s bid “superior” and estimated Discovery Global’s value at under $1.50 a share. Ouch. That’s a major crack in the armor. When big investors start siding with the hostile bidder, the board’s “unanimous rejection” starts to look a lot shakier. It forces everyone to ask: is the Netflix deal for the studio assets *really* the best path, or is a clean, all-cash exit from Paramount the safer, smarter play for shareholders tired of the media merger rollercoaster?
What Happens Next
So where does this leave us? In a high-stakes game of chicken. Paramount has successfully injected a new, tangible data point into the debate. Every tick of Versant Media’s stock price is now a talking point. Warner’s board has to somehow convince shareholders that their complex plan—spin off Discovery Global, sell the studio stuff to Netflix—creates more value than a simple check. But with a major shareholder already publicly disagreeing, that convincing just got a lot harder. This fight is far from over. It’s going to come down to which narrative investors believe: Paramount’s story of a low-ball spin-off, or Warner’s story of future breakup value. Buckle up.
