Who will win the race to buy Warner Bros Discovery?

Investing.com -- The contest to acquire Warner Bros Discovery (WBD) is accelerating, with Bernstein analyst Laurent Yoon noting that “first-round, non-binding bids for WBD … are due in a couple of days,” drawing interest from at least three potential buyers: PSKY, NFLX and CMCSA.

Bernstein called it “an ideal setup for WBD … assuming an attractive offer materializes,” noting that the previously floated price of $23.50 “didn’t work, and the next bid has to be higher.”

Yoon highlighted an unexpected twist in recent weeks: CMCSA has “emerg[ed] as a credible bidder.”

While the firm does not doubt CMCSA’s ability to finance a deal, “where there’s a will, there’s always a structure,” the analyst wrote, it remains cautious about CMCSA’s ability to navigate a likely difficult regulatory review.

Even so, Bernstein said CMCSA “must consider” the option because it offers “more than a lifeline to reset and grow its Media business.”

From WBD’s standpoint, the presence of CMCSA is said to be strategically useful.

Bernstein stated that “from WBD’s perspective, there’s no downside from having CMCSA in the mix,” though the risk rises “if CMCSA submits a credible bid.”

The firm warned that if CMCSA’s offer were accepted and later blocked by regulators, WBD could be exposed to operational volatility, making a substantial reverse termination fee essential.

Bernstein estimated this fee should sit “in the mid to HSD billions,” citing CMCSA’s regulatory overhang.

Yoon argued PSKY remains the most motivated and best positioned to close a deal, saying it is “the most incentivized … and best-positioned (financing and regulatory)” bidder. NFLX ranks second, viewed as better placed than CMCSA but still facing regulatory hurdles.

Overall, Bernstein’s current ranking is: PSKY > NFLX > CMCSA.

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