Warner Bros. bidders are having a rough time

THE DUELLING SUITORS for Warner Bros. Discovery have had a rough week. Will this rule out an auction? Don’t count on it.

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Netflix’s shares have slid further, to sit nearly 25% below where they were before its interest in Warner emerged. Oracle, the source of wealth for the rival party, the Ellison family, tumbled to take its peak-to-trough fall to nearly 40%.

The hits are worth roughly $100 billion and $360 billion respectively.

For now, Netflix leads having secured the backing of Warner’s board to buy the company for $27.75 a share in cash and stock, after the cable business is separated next year. Estimates for the value of that legacy broadcast arm that Warner shareholders will vary markedly. Some analysts put it at slightly more than $2 per Warner share. On that view, the full Netflix offer is worth $30 per share, or about $78 billion, before taking into account the risks around antitrust clearance.

Paramount Skydance, backed by Oracle Co-Founder Larry Ellison and led by his son David, this week bid to buy Warner outright for $30 a share in cash. Some Warner shareholders cheered this simpler pitch. But the Ellisons still need to persuade the target’s board to scrap the Netflix agreement before signing a new deal with them. Until that happens, Netflix doesn’t strictly need to respond.