The people at Comcast are saying “We got this in the bag.” Most of Wall Street isn’t so sure.
The word coming from the cable giant is that it has the money that Warner Bros. Discovery CEO David Zaslav wants – and that it will scoop up at least parts of the media conglomerate it’s most interested in: its HBO Max streaming service and its top-ranked Hollywood studio.
But the enthusiasm from Comcast CEO Brian Roberts and his bankers at Goldman Sachs and Morgan Stanley is drawing skepticism on Wall Street and in Hollywood, which have been captivated by the bidding war for one of media’s most prize possessions. Final bids for the company are scheduled to be delivered later this week.
A combination of money issues and regulatory hurdles makes Comcast a dark horse to complete the deal even if it can come up with a winning bid, the skeptics tell On The Money.
“Comcast’s problem is their stock is trading low and their leverage high, but their biggest problem is regulatory,” said an antitrust lawyer involved in the deal. “It will be more than a two-year process and still fail.”
A Comcast spokesman had no comment but a senior person at the firm says it’s as well positioned as anyone to make a run for the company.
“We have plenty of growth opportunities in our six growth drivers, and we are investing in those,” this person said. “We have the best balance sheet and credit rating in our industry. We have an obligation to look at things so we do that.”
It will certainly need all of that and more. Warner Bros Discovery, aka WBD, houses a movie hit machine studio, the No. 3 largest streamer in HBO Max, and big time cable properties like HBO and CNN. A deal could run as high as $70 billion.
Even so, Roberts, with Goldman Sachs and Morgan Stanley at his side, is said to be lusting to combine WBD with Comcast, a media company that is breaking off its lefty cable network, MSNBC and financial news outlet CNBC into a separate company while leaving Roberts to manage a middling studio, ratings challenged NBC and some broadband and cable pipes.
What’s unclear is how he can pay for a deal that will cost many tens of billions of dollars depending on how much of WBD he bids on. Comcast has a weak cash position—just $9 billion. It has an A-minus bond rating that could easily be destabilized with a large borrowing to finance the deal since it has nearly $100 billion in debt.
Its stock price has cratered over the past year amid investor business-model concerns. It’s down 36% compared to a nearly 6% decline in arch rival Disney and a 14% spike in the S&P.
Roberts’ access to cash has been in question at least in Wall Street and media circles; he was recently spotted in Saudi Arabia, meeting with officials from its massive public investment fund for financing, Wall Street executives say. Bringing in a foreign owner for a major US media asset could be an issue in getting regulatory approval for any deal.
In the end Roberts might get the money (Goldman and Morgan can be persuasive) but money won’t buy you love from President Trump, whose regulatory apparatus, namely the DOJ antitrust division, is needed to OK any transaction.
Let’s just say Trump isn’t a fan of the CEO who runs the Trump-hating MSNBC, and “Saturday Night Live,” which mocks the president on a weakly basis far more harshly than it did former President Biden, despite Sleepy Joe’s lack of mental acuity while in office.
Meanwhile, Trump, as The Post has previously first reported, would like his pals at Paramount Skydance to emerge victorious in the WBD bake-off, which has also attracted interest in streaming giant Netflix, the streaming giant that is said to be offering payment in stock.
The president has all but guaranteed the green light for Paramount Skydance’s nearly $60 billion all-cash bid for the entire WBD. It would be run by independent movie producer David Ellison, the son of Oracle co-founder Larry Ellison, the billionaire Trump donor.