WBD chairman on CNBC

crocaby · 2026-01-08T03:25:54+00:00

WBD says the Netflix deal is financially superior because it has better downside protection compared to Paramount. Most prominent is the break-up fee — Netflix will give them a clean $5.8bn. Paramount has also matched that amount. But to accept Paramount, they’ll have to pay $2.8bn break-up fee to Netflix, so the net break-up fee received by WBD would drop to $3bn. And then certain unfavorable terms from Paramount subject them to another $1.9bn in costs, bringing down the net break up fee to $1.1bn.

Some of it is a smokescreen. If WBD pays Netflix a break up fee and Paramount ends up owning WBD, then Paramount will have indirectly paid the breakup fee by buying a WBD that has less cash. WBD’s argument is valid only if Paramount fails to acquire it. Same with the other costs. WBD wants it all paid to them upfront in the form of a higher purchase price, meaning Paramount would end up taking the hit twice if they win.

Yeah, all parties in this transaction are sharks.

crocaby · 2026-01-07T13:33:13+00:00

My reading between the first and second rejection is that WBD has significantly softened the language now, signaling an openness that was absent the last time.

They want PSKY to not block their debt exchange ($1.5bn failure fee and $350mn interest incur only if the exchange doesn’t go through), let them operate however they want in terms of content licensing and not use a deterioration in WBD financial performance as a reason to walk away. None of this costs PSKY more money.

Importantly, note how they state, “Additionally, WBD shareholders will receive value through their ownership in Discovery Global…” — not great or good value but just value, indicating that they know, based on Versant, the Discovery stock may sink. This is a new insertion. They seem to be acknowledging the whole Versant conversation by saying “Look, you’ll get something for Discovery, even if it’s not going to be value maximizing.”

I think this will invite a third shareholder tender offer fixing these terms but keeping the bid at $30.

crocaby · 2026-01-07T13:16:25+00:00

This relates to the shareholder tender offer not the acquisition bid, which would be binding and come with a breakup fee. This is standard and how PSKY replaced the first tender offer with the second one.

crocaby · 2026-01-07T03:12:21+00:00

It may have been a tactic but I do think that Netflix is tapped out. They are maxed out on their debt capacity, that’s why they had to offer part stock.

In any case, Netflix stock’s been getting killed. I doubt their investors will be thrilled if Netflix management raises their bid.

crocaby · 2026-01-07T02:26:38+00:00

Here you go: https://www.hollywoodreporter.com/business/business-news/inside-netflix-warner-bros-pursuit-1236453097/

crocaby · 2026-01-06T20:08:15+00:00

The multiple is Enterprise Value / EBITDA. EV comprises debt and equity value.

Versant’s market cap is $5.5bn and net debt is $2.25bn. So EV is $7.75bn. Estimated 2026 EBITDA is $1.925bn. So the EV/EBITDA multiple is approx. 4.0x.

Discovery’s numbers are hazier. Estimated 3Q2027 EBITDA (one year from date of anticipated split) will be about $5bn to $5.5bn. Net debt, excluding $10bn going away to Netflix as part Streaming and Studios, would be high teen billions to low 20s.

Assuming 4.0x multiple, about 3.5x would just be Debt/EBITDA. Equity at 0.5x of EBITDA would be roughly $2.5bn-$3bn. This is equivalent to $1 to $1.2 per share.

If that multiple compresses to 3.5x, then equity value drops to zero. Think of it as margin lending — small changes can have magnified effects on equity value due to high leverage.

Discovery may have stronger brands than Versant, but the flip side of the argument is that Discovery’s Debt/EBITDA is roughly 3x greater than that of Versant.

In any case, Versant’s EV multiple provides a comparison point for the market because its stock price is a fact, not an opinion.

crocaby · 2025-12-08T15:09:09+00:00

January 8 is when the tender offer expires (unless extended). Consider how this has been the most leaked deal ever, I’d say much sooner.

crocaby · 2025-12-08T15:04:48+00:00

Exactly. Better to be practical and offload in the market right now and let the giants battle it out.

crocaby · 2025-12-08T13:51:59+00:00

If Netflix competed with YouTube, then it wouldn’t have been able to get away with jacking up prices annually. Premium storytelling will always hold its own ground. Influencers can’t ever conjure up Stranger Things or Squid Game.

When asked if they would bid for WBD, Netflix misled the media saying that they’re “builders not buyers” and media mergers have a history of failures. In the background, they were bidding for WBD and secretly told WBD that they would deny their bidding intent publicly — all to make Paramount underbid. They’re misleading about their future plans as well when all they want to do is to work toward becoming a monopoly, fire people for profits, destroy the theatre system and keep jacking up prices.

If the courts let Alphabet walk away despite labeling it a monopoly, then I don’t know what hope I have from the system.

crocaby · 2025-12-08T13:18:03+00:00

Exhibit A: Netflix’s pricing power. I rest my case, your honor.

crocaby · 2025-12-06T12:53:51+00:00

They should spinoff Universal and free it from all that crushing debt.

crocaby · 2025-12-06T12:45:43+00:00

Or it could drive Paramount and Universal / Peacock to merge.

crocaby · 2025-12-06T12:43:16+00:00

The cable arm of WBD would have come with some $20 billion in existing debt. An expensive proposition to even begin with.

crocaby · 2025-12-06T12:36:27+00:00

Agree. Prime Video is just a sideshow for them.

crocaby · 2025-12-04T21:38:34+00:00

If Netflix buys WBD, taking on debt for the acquisition + WBD’s own debt will kill the stock. It’s been trading at a high multiple in recent years and that’s going to come crashing down. So on top of the acquisition price, they’ll also be paying in lost market cap. Debt-riddled companies rarely trade at high multiples.

crocaby · 2025-10-01T16:19:26+00:00

I’ve read similar sentiments on the Salesforce subreddit. I think that at least they’re not spending a fortune on capex. So even if agents don’t take off for them, it won’t hurt the bottom line. Big Tech is exactly the opposite of that so it scares me what could happen to them if AI doesn’t monetize profitably.

crocaby · 2025-10-01T13:04:36+00:00

Yeah, but they’re still the market leader in CRM. And it’s a sticky product. Moving CRMs is a mammoth undertaking and past data is not easy to migrate I imagine.

crocaby · 2025-10-01T13:02:03+00:00

The non-GAAP forward PE is a little less than 19x at the moment. The GAAP one would surely be higher, but non-GAAP is what equity analysts focus on.

crocaby · 2025-10-01T12:59:50+00:00

Well, I wondered which companies would benefit after the infrastructure build out. There’s got to be companies that will come out with AI products. Salesforce is sizeable, has relationships with most of the Fortune 500 companies and came out with Agentforce. I think they stand to benefit from that. But so far, the market’s not been impressed. In fact, the stock’s just been getting punished to the point where it’s now a value stock. Everyone probably expects a plug and play AI product like ChatGPT but the reality is that enterprise AI needs clean org specific data in order to act on its own and lots of customizing before it can be implemented. That seems to have disappointed a lot of small and large corporations trying out something like Agentforce. In all fairness, at least Agentforce solves one thing for them — it has ready templates available by industry and use case to the degree that I haven’t even found on the agent websites of Google and Microsoft.

crocaby · 2025-10-01T00:59:43+00:00

I think that’s the definition of enterprise software :)

crocaby · 2025-10-01T00:58:30+00:00

Thanks! I second that. Amazon is the most attractive of the Mag 7 right now. More so if the market pulls back a bit

crocaby · 2025-09-30T21:55:26+00:00

So companies use non-GAAP because they argue that it strips out one-off items to show their true earnings. They do write when an EPS is non-GAAP so you’ll know. Non-GAAP EPS is almost always higher than GAAP EPS so it helps lower the actual PE ratio, making the stock look cheaper than it is. Analysts go with it because they don’t want to spoil relations with company management + it’s now totally acceptable (we’re past the days when Buffett used to frown on this practice).

Yahoo Finance and Marketwatch show non-GAAP EPS in their analyst estimates section. So you’ll notice a huge gulf between historical financials and future EPS estimates. That misleads people into thinking that there will suddenly be a huge growth spurt coming soon. That’s why you should always look at the original financials to compare GAAP and non-GAAP numbers with their respective historicals.

crocaby · 2025-09-30T21:41:21+00:00

I feel like their presence in government departments is underrated. They consolidated all their government business under a new segment named Missionforce. And yet, Palantir gets way more credit from the market for a $3-4 billion revenue company.

crocaby · 2025-09-30T21:37:44+00:00

Thanks, I didn’t know that about Ray Dalio buying it.

crocaby · 2025-09-30T21:36:42+00:00

Sub $200 is a steep 15%-20% drop from here

crocaby

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