Warner Bros. Discovery (NASDAQ:WBD) is most likely to continue with its plans to split itself amid reports that Paramount Skycance (NASDAQ:PSKY) will make a bid for the entertainment giant, according to a BofA analyst.
“It is our view that as a standalone entity WBD’s streaming and studio assets would generate a bidding war amongst potential buyers, and therefore, we believe a split of the company can garner the greatest potential value,” BofA analyst Jessica Reif Ehrlich, who has a buy rating, wrote in a note on Tuesday. She raised the WBD price target to $24 from $16.
The comments come after a report on Monday that a Paramount Skydance (NASDAQ:PSKY) bid is unlikely to be on a friendly basis. Paramount Skydance (NASDAQ:PSKY) will likely make an offer at some point, which will be largely in cash, CNBC’s David Faber said on Monday.
“We continue to believe the WBD Streaming and Studios businesses are crown jewel assets in the media ecosystem,” Reif Ehrlich wrote. “As we have written previously, we believe there will be significant demand for the Warner Bros assets following a split of the company. There are potential buyers who, in our view, would be interested in the Warner Bros assets unburdened by WBD’s linear assets and significant debt load.”
Paramount Skydance (PSKY) may be trying to make a bid before Warner Bros.’ planned split in an attempt to pre-empt a possible bidding war for the studio and streaming unit that could include mega tech companies like Amazon.com (AMZN) and Apple (AAPL), according to the WSJ report earlier this month.