Analysis of Valuation Discrepancies in Paramount's Acquisition Offer for Warner Bros. Discovery

This analysis focuses on Paramount’s acquisition offer for Warner Bros. Discovery (WBD), with the core controversy being whether the valuation is reasonable. Warner’s board of directors and major investors believe the offer “grossly undervalues” the company, reflecting valuation discrepancies amid media industry consolidation.

1. Core Controversy Over Offer Valuation
   : Paramount’s latest all-cash offer is $30 per share, with a total enterprise value of approximately $108.4B[5]. However, WBD’s current trading price is around $29.19[0], so the offer only has a premium of about 2.8%, far below the industry standard of 20-40% or higher for typical acquisition offers[5].
2. Misleading Nature of the “139% Premium”
   : The premium cited by Paramount is based on WBD’s “undisturbed” price of $12.54 on September 10, 2025, but this price was before the transaction intention was leaked. After the leak, WBD’s stock price soared to near its 52-week high (currently around $29.19)[0], so this premium has no practical significance for investors holding shares now[5].
3. Comparison with Netflix’s Offer
   : Netflix’s offer is $27.75 per share to acquire WBD’s streaming and studio businesses, and it plans to spin off WBD’s global linear network business (Discovery Global) into an independent company. Investors are evaluating the combined value of Netflix’s offer plus the spun-off assets, which may be higher than Paramount’s $30 offer[5][6].
4. Historical Concerns About Financing Structure
   : Although the latest offer is in all-cash form, the financing structure of the early offer was criticized by Warner’s board as “opaque”, involving complex arrangements such as Middle Eastern sovereign funds, with uncertainties and risks[1]. These early issues may lead investors to still have concerns about Paramount’s transaction execution capability[5].

1. Misalignment Between Market Expectations and Pricing
   : WBD’s stock price has risen sharply due to the leak of the transaction intention, yet Paramount still calculates the premium based on the pre-leak “undisturbed” price. This strategy has intensified investors’ perception of insufficient valuation.
2. Valuation Complexity in Media Industry Consolidation
   : Valuation differences between streaming and traditional linear network businesses, as well as potential value release from asset spin-offs, have increased the difficulty and controversy of valuation in media industry mergers and acquisitions.
3. Long-Term Impact on Investor Trust
   : The opaque financing structure of the early offer may have a long-term impact on Paramount’s transaction credibility. Even though the latest offer is in all-cash form, investors still need time to restore trust.

• Risks
  : If Paramount cannot adjust the offer price or address investors’ concerns, the acquisition may fail, leading to stock price fluctuations for both parties[0]; regulatory approval uncertainty may also affect the transaction’s prospects.
• Opportunities
  : The media industry consolidation trend continues; if the transaction succeeds, it may bring scale effects and synergistic value to both parties[1]; asset spin-offs may also unlock additional value for WBD shareholders[6].

• WBD’s real-time stock price is $29.19 (2025-12-24 ET), with a market capitalization of approximately $72.32B[0].
• Paramount’s offer is $30 per share in all cash, with an enterprise value of approximately $108.4B[5].
• Netflix’s offer is $27.75 per share, with an enterprise value of approximately $82.7B, to acquire streaming and studio businesses[6].
• Investors’ main concerns about Paramount’s offer include excessively low premium, misleading premium calculation, competition from Netflix’s transaction, and legacy issues from the early financing structure.

(Note: This report is based solely on the provided analysis results and does not include image content.)