With the new bid, Warner Bros. Discovery’s auction scope appears limited

Warner Bros. Discovery winning bidders is expected to accelerate this week.

Monday marks the deadline for the second round of proposals, which Warner board members hope will bring sweetened bids for the award from three contenders. Comcast, Paramount and Netflix each submitted initial non-binding offers last month, forming the auction floor.

Warner Bankers has privately indicated to interested parties that this round may not be the final turnaround, but they expect Monday’s bid to help them zero in on a preferred merger partner, according to people close to the process who were not authorized to comment.

Warner Bros. Discovery hopes to make its selection before the start of the winter holidays.

“The global media industry stands on the brink of historic change,” Bank of America media analyst Jessica Reif Ehrlich and three colleagues wrote in a research report Monday.

The sale of Warner Bros. would represent the biggest Hollywood merger since the buyout began 30 years ago with the Walt Disney Co.’s purchase of Capital Cities, which owns ABC and ESPN. This period was overshadowed by the ill-fated sale of Time Warner to Internet service provider AOL in the early 2000s—a disastrous merger that robbed Warner of valuable assets. It took more than a decade for the company to recover.

Since then, Netflix, Amazon and Apple have moved into the field, ushering in a streaming revolution that has dramatically changed consumer behavior, leaving the entertainment industry’s financial foundation — cable TV bundles and blockbuster theatrical releases — on shaky ground.

Warner’s current bidding war “reflects the economic reality … that mid-sized legacy media studios/companies can no longer compete with Netflix’s monolithic economy or the ecosystem of major tech players like Amazon,” Bank of America analysts wrote.

They said Larry Ellison’s family’s Paramount and Comcast’s NBCUniversal may feel the need to grow, pushing both to acquire Warner’s assets, which include Warner Bros.’ film and TV studios in Burbank, premium channel HBO and streaming service HBO Max.

Representatives for Warner, Paramount, Comcast and Netflix declined to comment.

Paramount is seen as the dominant prospect given the Ellison family’s vast wealth and political connections.

President Trump counts Larry Ellison among his friends, who can ensure a regular regulatory review process with the Justice Department. The president has indicated that he wants to see Ellison control CBS — currently under the Paramount-Skydance umbrella — and CNN, which is owned by Warner Bros. Discovery.

Paramount offers the most effective takeover because it has expressed interest in buying all of Warner, including its cable channels, which include TBS, TNT, HGTV, the Food Network and Animal Planet. TechScan and Paramount CEO David Ellison began bidding informally in September, making three offers by mid-October.

But Warner’s board rejected all three offers, considering them too low. The company then opened the process to other bidders, allowing Comcast and Netflix to join the field.

Ellison recently visited oil-rich Middle Eastern countries, holding preliminary talks with sovereign wealth funds about possible investments should Paramount win the Warner auction, according to two sources familiar with the matter.

Warner Bros. Discovery shares rose less than 1% to $23.87 on Monday.

Some analysts expect an increase from Comcast, which is controlled by Philadelphia cable mogul Brian Roberts.

Warner Bros. Discovery CEO David Zaslaff prefers Comcast over Paramount, people in the know say.

Through its ownership of European broadcaster Sky, Comcast has expanded its global footprint.

But Comcast has significant debt and its stock has been stagnant for years.

Comcast and Netflix have each expressed interest in buying the studios, HBO and the streaming service.

Neither Comcast nor Netflix is ​​interested in Warner’s linear cable channels. Comcast plans to separate its portfolio of cable networks, including USA Network, CNBC, MS NOW (formerly MSNBC) and the Golf Channel, in a spinoff that should be finalized in January. The cable channels will form an entity called Versant.

“The market is witnessing the endgame of the cable TV era,” Bank of America analysts wrote. “The Warner Bros. studio is the crown jewel, right? [intellectual property] From Harry Potter to DC Comics to Game of Thrones (and more).

The purchase of Warner Bros. and HBO will boost NBCUniversal’s television production capabilities and boost its legacy streaming service Peacock, which has struggled for scripted streaming hits.

Comcast executives are also eyeing Warner Bros. franchises that include Superman and other DC comics, “Lord of the Rings” and “The Matrix,” which could provide more characters for its growing Universal Studios theme parks.

Netflix also sees great value in Warner Bros. franchises. In addition, Warner Bros. Television has long been one of the industry’s most successful television producers, having given birth to “The Big Bang Theory,” “Ted Laso” and “Pete.”

The Warner Bros. acquisition would give Netflix co-CEO Ted Sarendos the legendary movie studio lot — something Netflix currently lacks. Streamer’s LA offices sit on a relatively small avenue overlooking the 101 Freeway.

Either combination would lead to layoffs in the media industry, which is already reeling from a slowdown in TV and film production and thousands of job losses over the past two years.

Paramount has laid off more than 2,600 workers in recent months. The Ellison family and Redbird Capital Partners consolidated their purchase of Paramount in August.

Warner Bros. Discovery has also shed employees as it struggles under a huge debt burden brought on by its latest merger — Discovery’s $43 billion acquisition of Warner Media from AT&T in 2022.

Warner still has about $34 billion in debt.