Paramount-Warner Bros seen ’as a formidable competitor’ to Netflix

Investing.com -- Deutsche Bank told clients in a note on Friday that a tie-up between Warner Bros. Discovery and Paramount Skydance would create a powerful global streaming player, following Warner’s announcement that its board has deemed PSKY’s $31-per-share bid a superior offer.

Analyst Bryan Kraft raised his price target on Warner Bros. Discovery to $31 but cut the rating to Hold, given the “limited upside potential.”

Kraft wrote that PSKY’s proposal is “a Superior Proposal relative to Netflix’s existing offer of $27.75 per share for just Warner’s Streaming & Studios businesses.”

According to Deutsche Bank, Netflix’s decision not to match the higher bid and instead walk away from the transaction was unsurprising given the likelihood that Warner and PSKY would ultimately settle on terms.

The note cited CNBC reporting that Netflix co-CEO Ted Sarandos visited the White House to discuss the proposed deal.

Deutsche Bank said it had believed that “the tenor of Mr. Sarandos’ meeting(s)… might inform whether Netflix does, in fact, raise its bid.” The bank added that it is unclear whether the meeting influenced Netflix’s final decision.

Deutsche Bank views a combined PSKY-Warner Bros. Discovery “as a formidable competitor to Netflix in the U.S., and well-positioned to realize its global growth ambitions.”

The analyst added that the merged company would possess “all the content and IP needed for success at scale” and that the transaction should clear regulatory review “with minimal friction.”

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