New World Invesment Research

P(Versant), Jan 2 = 46.65
P(Versant), Jan 6 = 36.26
% change = -22.3%

The internet names investor skepticism about the growth prospects of a standalone, legacy cable-TV business and immediate selling by Comcast shareholders after the spin-off began trading among the reasons for the decline in shares.

I believe this will play into PSKY’s hands since it will support their somewhat low valuations of the cable networks division at WBD.

Furthermore, I see that NFLX and PSKY have different underlying motives behind this acquisition. For NFLX, WBD will be a beneficial addition to its existing media and telecommunications empire and will allow it to continue to gain market share. For PSKY, WBD is, to some extent, a must for future growth. PSKY is likely to increase their offer to outbid NFLX, but I am not sure if Ellisons are ready to pay any price.

From this perspective, I see why NFLX might indeed be better for WBD from a long-term standpoint. NFLX already has an established position in the market, and so does WBD. Their merger will provide synergies for both, with NFLX uplifting WBD. PSKY, in turn, has a weaker position and poor financial performance, with total debt exceeding its market capitalization at the moment.