Warner Brothers Fight Continues

December 17, 2025

As a reminder, we're following the ongoing drama surrounding the bidding war for Warner Brothers Discovery (WBD). The stocks are relatively small as a % of the market, but who wins will reshape the media landscape in massive ways. And also, this bidding war is one of the most interesting deals in recent memory!

So let's see. Where are we?  Two weeks ago, the WBD board chose Netflix as the winner of the bidding war.  

PSKY obviously was upset.  So PSKY countered with a “tender offer” – that is, an offer to buy WBD shares from holders directly at $30/share.  Today, the WBD board recommended that shareholders say “no” to that offer.  No surprise there.

But what is interesting is the “why”.  In the filing, the WBD board didn’t focus much price.  Rather, they harped on how PSKY planned to pay.  The PSKY bid is two big chunks - $54 billion in debt and $41 billion in equity.  

The $54 billion in debt is coming from Bank of America, Citigroup, and Apollo.  But their commitment is contingent that the equity piece being funded first.  If the equity funders backed out (or changed their deal), then no debt either.

So who are the equity funders?  Of the $41 billion, $24 billion is from Middle East investors.  $12 billion is from a REVOCABLE trust from Larry Ellison.  $1 billion is from Tencent (ie, China).  And the rest is from a long tail of other smaller investors.  Jared Kushner has backed out.

“Will these folks actually come up with the money?”  That is the key question that WBD’s board is focused on.  Larry’s revocable trust is an opaque entity that can be altered at any time.  And the inclusion of the foreign investors means that the deal must pass CFIUS (committee on foreign investment in the US) review now to close.  

This brings up a big problem.  PSKY said it needs 12-18 months to obtain all the required regulatory approvals.  So what happens on Jan 8th then?  If you click “yes” to tender your shares, PSKY is not buying them… yet.  They wont pay until they get regulatory approval.  So your “yes” puts your shares in a “lock box” at  your broker.  You still own them, but you cant really sell them without jumping through some extra hoops.  

I gotta admit.  WBD’s board has a strong point.  PSKY might have an easier time with DOJ than Netflix would.  We all assume the Trump DOJ will let it go through.  But even still, the completion date is still YEARS away.  WBD stock is trading at $28.50ish today.  Would you agree to put your shares in a box today in exchange for $30 a year or two from now?  Oh and the deal might all fall apart along the way anyway if Larry or the Saudis change their minds. For this reason, ISS and Glass Lewis will almost certainly recommend a “no” on tendering shares until a final timeline becomes clearer.  (They will issue that recommendation in a week or so.)

So what happens now?  Well, it seems to be the $30 offer by Jan 8th is almost certainly going to fail.  So what happens after that?  Well, the shareholder vote on the Netflix offer is likely next spring.  If shareholders say “yes”, then that’s that.  Netflix wins.  But a lot could happen in the meantime.  PSKY could increase their bid even more, or firm up the uncertainty in the funding sources, etc.