Fund manager Mario Gabelli said it’s “very likely” he will offer Warner Bros. shares. Discovery Inc. from its customers to Paramount Skydance Corp. in a bid to spark a bidding war for the film and television company.
In an interview, Gabelli said Paramount will ultimately have to increase its $30 per share offer for Warner Bros. and that Netflix Inc. will likely also retaliate with a higher offer. Saying he supports Paramount’s bid is a way of signaling that he prefers more competition for the company.
“We’re only in the early rounds,” Gabelli said. “Fifth round of a nine-round challenge.”
Warner Bros. action rose 3.8% to $28.26 at the New York close Tuesday.
The longtime media investor attended Paramount’s presentation at a UBS conference Tuesday and came away impressed. Management “has done a very good job” of addressing potential regulatory challenges, particularly at the state level, he said.
Gabelli’s company and funds own nearly 5.7 million shares of Warner Bros. stock, according to data compiled by Bloomberg, worth about $160 million based on Tuesday’s closing price. He also owns shares in Paramount and Netflix.
Warner Bros. agreed last week to sell its streaming and studio businesses, including HBO, to Netflix for $27.75 per share in cash and stock. Paramount made public a cash tender offer for Warner Bros. on Monday. and seeks to convince investors that its offer is better.
Gabelli plans to bid because “the terms of trade favor Paramount,” including an all-cash proposal that does not rely on publicly traded stock or the Warner Bros. spinoff. cable networks, as does Netflix’s offering.
Gabelli would not say which company was best suited for Warner Bros.
“I don’t like to approve of certain things,” he said. “That’s why you play this card (a call offer). It’s Texas hold’em.”
On Tuesday, Gabelli’s company said in a regulatory filing that it purchased more shares of movie theater and hospitality company Marcus Corp.
Theater chains, which have been battered by lukewarm ticket sales and the threat of cuts to Hollywood releases, are a buy, Gabelli said. Warner Bros., winner of Paramount, would be “clearly better” for theaters because management believes in traditional movie releases.
