Money manager Mario Gabelli said it’s “highly likely” he will tender his clients’ Warner Bros. Discovery Inc. Shares to Paramount Skydance Corp. In an effort to spark a bidding war for the film and TV company.
TL;DR
- Mario Gabelli likely to tender Warner Bros. Discovery shares to Paramount Skydance Corp.
- Gabelli expects Paramount to raise its $30-per-share offer and Netflix to submit a proposal.
- Gabelli favors increased competition for Warner Bros. Discovery, seeing it as early rounds of a challenge.
- Gabelli's firm holds 5.7 million Warner Bros. shares, valued at approximately $160 million.
During an interview, Gabelli stated that Paramount will eventually need to raise its $30-per-share offer for Warner Bros. And that Netflix Inc. Is also expected to submit a more substantial proposal. His endorsement of the Paramount tender offer serves as an indication that he favors increased competition for the company.
“We’re in the early rounds,” Gabelli said. “Round five of a nine-round challenge.”
Warner Bros. Shares were up 3.8% to $28.26 at the close in New York on Tuesday.
The longtime media investor attended Paramount’s presentation at a UBS conference on Tuesday and walked away impressed. Management “did a very good job” addressing potential regulatory challenges including at the state level, he said.
According to information gathered by Bloomberg, Gabelli's company and its investment vehicles possess close to 5.7 million in Warner Bros. Stock, valued at approximately $160 million as of Tuesday's market close. Additionally, he has investments in Paramount and Netflix.
Last week, Warner Bros. Reached an agreement to divest its streaming and studio operations, encompassing HBO, to Netflix for a price of $27.75 per share, comprising both cash and stock. Paramount publicly announced on Monday a cash-only tender proposal for Warner Bros., and has been actively working to persuade investors that its offer is superior.
Gabelli intends to submit a bid due to the “terms of trade favor Paramount,”, which features a full cash offer that avoids dependence on publicly traded shares or the divestiture of Warner Bros.’ Cable channels, unlike Netflix’s proposition.
Gabelli wouldn’t say which company was a better fit for Warner Bros.
“I don’t like to endorse things,” he said. “That’s why you play that card (a tender offer). It’s Texas hold ’em.”
Gabelli's firm disclosed in a filing with regulators on Tuesday that it acquired additional stock in the cinema and hotel enterprise Marcus Corp.
Movie theater chains, which have been battered by tepid ticket sales and the threat of cutbacks in Hollywood releases, are a buy, Gabelli said. Paramount winning Warner Bros. Would be “clearly better” for theaters because management believes in traditional film releases.
