Warner Bros Discovery: Between Rejecting Paramount and the Challenge of Redefining Hollywood
By Ion Jauregui – Analyst at ActivTrades
The latest episode in Hollywood’s corporate soap opera has Warner Bros Discovery (NASDAQ: WBD) and Paramount Skydance (NASDAQ: PSKY) in the spotlight. According to Bloomberg, Warner Bros Discovery has rejected the first purchase offer from Paramount Skydance, valued at around $20 per share, considering that the proposal did not reflect its true market value.
This move comes amid profound transformations in the audiovisual industry, pressured by streaming competition, high production costs, and the collapse of traditional advertising revenues.
The $36 Billion Giant
After merging with Skydance for $8 billion, David Ellison now leads a conglomerate aiming to become one of the industry’s major players. Sources close to the negotiations indicate that Ellison is willing to improve the offer, engage directly with Warner shareholders, or bring in new financial partners, including Apollo Global Management, which could provide the necessary economic backing for a larger-scale deal.
If successful, the merger between Paramount Skydance and Warner Bros Discovery could reach a combined valuation of nearly $36 billion, creating a giant capable of competing with Disney (NYSE: DIS) and Netflix (NASDAQ: NFLX).
Reconfiguring Debt and New Challenges
However, Warner Bros Discovery still carries a debt exceeding $40 billion, inherited from its 2022 merger with WarnerMedia. This, combined with integration challenges and fragmented business units, complicates any acquisition attempt. Integrating two such complex structures could generate operational overlaps and cultural tensions within the new entity.
The group led by David Zaslav continues to cut costs and restructure divisions to increase profitability, especially after a 2024 marked by mixed results and a slowdown in HBO Max subscriptions.
In the markets, Warner Bros Discovery shares remain under pressure, trading around $17.10, after falling more than 25% year-to-date, reflecting investor skepticism about short-term profitability. While the initial rejection could be seen as definitive, Paramount Skydance’s continued interest and potential involvement of funds like Apollo Global Management open the door to new corporate moves in the near term. Paramount Skydance seeks to establish itself as an aggressive player ready to lead industry consolidation. In any case, the outcome will not only define the future of both companies but could also reshape the balance of power in the entertainment industry.
Technical Analysis (Ticker AT: WBD, Ticker AT: PSKY)
Friday’s market sell-off also hit WBD and PSKY, delivering a cold bucket of water to those betting on sustained upward momentum. Factors that may have driven this include:
Correction after speculative rally: The stock had seen strong upward movements fueled by acquisition rumors (Paramount/Skydance) and expectations of future restructuring. This rise created “air” for corrections: investors took profits and adjusted positions against previously identified technical supports.
Uncertainty about the deal: WBD’s rejection of the initial $20/share offer makes it clear that a superficial approach is not enough; negotiations, counter-moves, and possibly new offers will be required. This “power game” creates an anxious atmosphere.
High volume during the drop: Friday’s pullback occurred with increased volume compared to previous days, indicating it was not an isolated move but backed by real selling interest amid weakness signals. In many crypto exchanges, for example, this led to a financial hecatomb with massive liquidations.
Technical triggers: Prices hit resistance levels that had recently served as psychological zones and were strongly rejected.
Sensitivity to news and rumors: In such a “viral” market with M&A speculation, any unfavorable rumor increases selling pressure.
WBD: Since September 25, the stock has retraced below the momentum that took it to recent highs, closing at $17.10 on Friday. Breaking the 50-day moving average suggests the price could fall to $15.87 or even to the previous range of $10.69–$13.91 if support does not hold. The 100-day moving average could act as support, allowing a new consolidation zone between $15.87 and $20.24. RSI at 47.51% indicates slight oversold conditions, while the negative MACD suggests continuation of the correction. The Point of Control (POC) at $12.85 signals a possible retracement of recent speculation if the market does not hold.
PSKY: After hitting $20.86 on September 23, it corrected to $17, slightly above the 100-day moving average. Its current support is $16.64; if breached, it could fall to $15. RSI at 44.21% and a bearish MACD confirm oversold pressure. The POC at $18.77 indicates its consolidation zone is stronger than WBD’s, due to speculation around the deal.
Risk Scenario (RISK OFF)
The ActivTrades US Market Pulse signals an extreme RISK OFF, which could push WBD toward $15.40 or even $11.60 and PSKY toward $15, while volatility and volume spike. This scenario would affect both share prices and the potential Paramount-WBD deal, as investors prioritize liquidity and may delay strategic decisions. For traders and investors, these moments demand caution but also allow identification of rebound zones and adjustment of positions amid abrupt market moves.
Wall Street Blockbuster
The rejection by Warner Bros Discovery does not mark the end but the start of a new round in the battle for global entertainment control. If David Ellison manages to raise his offer and secure external financing, the scenario could change drastically. For now, Hollywood once again shows that its most thrilling stories are not always told on the big screen but in the boardrooms of its major studios.
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The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance and forecasting are not a synonym of a reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk. Political risk is unpredictable. Central bank actions can vary. Platform tools do not guarantee success.
By Ion Jauregui – Analyst at ActivTrades
The latest episode in Hollywood’s corporate soap opera has Warner Bros Discovery (NASDAQ: WBD) and Paramount Skydance (NASDAQ: PSKY) in the spotlight. According to Bloomberg, Warner Bros Discovery has rejected the first purchase offer from Paramount Skydance, valued at around $20 per share, considering that the proposal did not reflect its true market value.
This move comes amid profound transformations in the audiovisual industry, pressured by streaming competition, high production costs, and the collapse of traditional advertising revenues.
The $36 Billion Giant
After merging with Skydance for $8 billion, David Ellison now leads a conglomerate aiming to become one of the industry’s major players. Sources close to the negotiations indicate that Ellison is willing to improve the offer, engage directly with Warner shareholders, or bring in new financial partners, including Apollo Global Management, which could provide the necessary economic backing for a larger-scale deal.
If successful, the merger between Paramount Skydance and Warner Bros Discovery could reach a combined valuation of nearly $36 billion, creating a giant capable of competing with Disney (NYSE: DIS) and Netflix (NASDAQ: NFLX).
Reconfiguring Debt and New Challenges
However, Warner Bros Discovery still carries a debt exceeding $40 billion, inherited from its 2022 merger with WarnerMedia. This, combined with integration challenges and fragmented business units, complicates any acquisition attempt. Integrating two such complex structures could generate operational overlaps and cultural tensions within the new entity.
The group led by David Zaslav continues to cut costs and restructure divisions to increase profitability, especially after a 2024 marked by mixed results and a slowdown in HBO Max subscriptions.
In the markets, Warner Bros Discovery shares remain under pressure, trading around $17.10, after falling more than 25% year-to-date, reflecting investor skepticism about short-term profitability. While the initial rejection could be seen as definitive, Paramount Skydance’s continued interest and potential involvement of funds like Apollo Global Management open the door to new corporate moves in the near term. Paramount Skydance seeks to establish itself as an aggressive player ready to lead industry consolidation. In any case, the outcome will not only define the future of both companies but could also reshape the balance of power in the entertainment industry.
Technical Analysis (Ticker AT: WBD, Ticker AT: PSKY)
Friday’s market sell-off also hit WBD and PSKY, delivering a cold bucket of water to those betting on sustained upward momentum. Factors that may have driven this include:
Correction after speculative rally: The stock had seen strong upward movements fueled by acquisition rumors (Paramount/Skydance) and expectations of future restructuring. This rise created “air” for corrections: investors took profits and adjusted positions against previously identified technical supports.
Uncertainty about the deal: WBD’s rejection of the initial $20/share offer makes it clear that a superficial approach is not enough; negotiations, counter-moves, and possibly new offers will be required. This “power game” creates an anxious atmosphere.
High volume during the drop: Friday’s pullback occurred with increased volume compared to previous days, indicating it was not an isolated move but backed by real selling interest amid weakness signals. In many crypto exchanges, for example, this led to a financial hecatomb with massive liquidations.
Technical triggers: Prices hit resistance levels that had recently served as psychological zones and were strongly rejected.
Sensitivity to news and rumors: In such a “viral” market with M&A speculation, any unfavorable rumor increases selling pressure.
WBD: Since September 25, the stock has retraced below the momentum that took it to recent highs, closing at $17.10 on Friday. Breaking the 50-day moving average suggests the price could fall to $15.87 or even to the previous range of $10.69–$13.91 if support does not hold. The 100-day moving average could act as support, allowing a new consolidation zone between $15.87 and $20.24. RSI at 47.51% indicates slight oversold conditions, while the negative MACD suggests continuation of the correction. The Point of Control (POC) at $12.85 signals a possible retracement of recent speculation if the market does not hold.
PSKY: After hitting $20.86 on September 23, it corrected to $17, slightly above the 100-day moving average. Its current support is $16.64; if breached, it could fall to $15. RSI at 44.21% and a bearish MACD confirm oversold pressure. The POC at $18.77 indicates its consolidation zone is stronger than WBD’s, due to speculation around the deal.
Risk Scenario (RISK OFF)
The ActivTrades US Market Pulse signals an extreme RISK OFF, which could push WBD toward $15.40 or even $11.60 and PSKY toward $15, while volatility and volume spike. This scenario would affect both share prices and the potential Paramount-WBD deal, as investors prioritize liquidity and may delay strategic decisions. For traders and investors, these moments demand caution but also allow identification of rebound zones and adjustment of positions amid abrupt market moves.
Wall Street Blockbuster
The rejection by Warner Bros Discovery does not mark the end but the start of a new round in the battle for global entertainment control. If David Ellison manages to raise his offer and secure external financing, the scenario could change drastically. For now, Hollywood once again shows that its most thrilling stories are not always told on the big screen but in the boardrooms of its major studios.
*******************************************************************************************
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance and forecasting are not a synonym of a reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk. Political risk is unpredictable. Central bank actions can vary. Platform tools do not guarantee success.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.