Gabelli Funds Chairman & CEO Mario Gabelli Talks Paramount's Acquisition of Warner Brothers Discovery

Summary

Bloomberg Talks – Episode Summary

Episode Title: Gabelli Funds Chairman & CEO Mario Gabelli Talks Paramount's Acquisition of Warner Brothers Discovery
Date: March 4, 2026
Host: Bloomberg
Featured Guest: Mario Gabelli, Founder, Chairman & CEO of Gabelli Funds

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Episode Overview

This episode centers on the media industry's blockbuster deal—Paramount’s acquisition of Warner Brothers Discovery—and the resulting aftermath, notably Netflix’s withdrawal from the bidding war. As a renowned value investor and expert in M&A, Mario Gabelli shares his perspective on the deal, broader trends in media and sports investing, and where he currently sees opportunities in financial engineering, spin-offs, and undervalued equities.

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Key Discussion Points and Insights

1. Reaction to the Paramount–Warner Brothers Discovery Deal

• Netflix Bows Out:
  • Gabelli remarks that while Netflix’s withdrawal might’ve seemed abrupt, it was a typical end result of M&A competitions where only one winner can emerge.
  • “It was obvious that unless they matched the materially higher proposal and the simplification of the proposal and the timing… the winner was Zaslav.” (Mario Gabelli, 01:06)
• Winners and Market Impact:
  • The outcome was positive for investors in both Paramount and, to some extent, Netflix, whose stock fluctuated but holds a strong breakup fee from the failed bid.
  • “There are a lot of individual winners here for all of those involved in this bidding war.” (C, 01:36)

2. What’s Next for Netflix?

• Strategy Recommendations:
  • Gabelli suggests Netflix should leverage its global reach and immense content spend (~$20 billion), focusing on theater releases to maximize value.
  • He proposes Netflix explore partnerships or acquisitions—specifically referencing potential opportunities with Sony and Japanese IP.
  • “Let them bring the content and show that they're willing to keep it in the theaters for that 45 day window.” (C, 02:07)
  • “I would like them to learn Japanese and think about knocking on Sony's door because of the anime that Sony is doing…” (C, 02:19)

3. State of M&A and Financial Engineering

• M&A Activity is Back:
  • Gabelli discusses how last year’s M&A environment was marred by failed deals (e.g., iRobot), but the current climate is “vibrant” for mergers, spin-offs, and arbitrage.
  • “So this is a terrific time. M and A is vibrant, unlike last year.” (C, 03:36)
• Arbitrage Opportunities:
  • Gabelli references his own co-authored book on M&A and emphasizes the global nature of such opportunities, highlighting the role of financial engineering and tax considerations.
• Notable Example:
  • He mentions companies like Myers in Ohio and the benefits of “razor, razor blade” models in mature industries like auto parts.

4. Current Investment Picks and Value Opportunities

• Traditional Businesses with Moats:
  • Gabelli notes the appeal of companies like Myers that distribute auto parts, citing the aging car fleet and weather impacts on demand for tires and parts.
  • “There's 1 billion vehicles on the road. ... Four tires per vehicle more or less. So that's 1.2 billion opportunities to sell products.” (C, 05:10)
• Spin-offs as Value Plays:
  • He references Versant (a Comcast spin-off), noting index fund selling often pushes prices below intrinsic value, creating opportunities.
  • “It was a spin-off. Financial engineering gate is a great opportunity to sit there with a basket and buy it…” (C, 06:24)

5. Sports Franchises and Entertainment Investing

• Split of MSG Sports Properties:
  • Gabelli discusses Madison Square Garden's possible split of the Knicks and Rangers into separate entities, weighing whether true value can be unlocked this way.
  • “Before used to have a Jimmy Dolan discount but when the spheres got… which was a spin-off has gone from like $30 to $120..." (C, 07:18)
• Sports Ownership Structures:
  • He describes private equity and LP structures in NFL, NBA, and soccer, mentioning his own fund’s focus on owning live experience companies.
  • “We have a fund that is going out and buying all of these companies in live events and basically experiences.” (C, 08:35)
• Most Undervalued Sports Plays:
  • Highlights Manchester United (MANU) as a stock to watch, considering possible monetization as global interest in soccer rises ahead of the World Cup.
  • “There's a company called Manu. Manchester United, the Glazers own control of the vote...” (C, 09:51)

6. The M&A Landscape Moving Forward

• Deal-Making Climate:
  • Gabelli observes that the current regulatory and market environment feels more accommodating for ambitious deals and spin-offs.
  • “CEOs are very optimistic that if they want to announce something, they're going to get it done. That’s a different dynamic. They always wanted to do it. Now they feel more comfortable.” (C, 12:17)
• Potential for Revived or Unfinished Deals:
  • He alludes to deals that were shelved—due to timing or regulatory issues—that may be reconsidered.
  • Mentions Smucker’s acquisition timing, Myers’ purchase of Signature, and National Fuel & Gas’s asset monetization as examples.
  • “We have several of them that we’re focusing on. ... In the case of Myers, they bought a company called Signature…” (C, 12:35)

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Notable Quotes & Memorable Moments

• On Netflix’s Next Move:
  “Let them bring the content and show that they're willing to keep it in the theaters for that 45 day window.” (C, 02:07)

• On M&A Environment:
  “M and A is vibrant, unlike last year. ... The arbitrageurs are not experiencing those potholes because of the more attention of, you know, the benefits of globalization, the benefits of consolidation.” (C, 03:41)

• On Value in Spin-offs:
  “Financial engineering gate is a great opportunity to sit there with a basket and buy it because we looked at the fundamentals...” (C, 06:23)

• On Sports Franchises:
  “The notion of having sports franchises—whether it's the NFL, the NBA, the NHL... How do you buy them and which ones are... We can buy and bundle them together so we don't have to pay to 1 in 20 or 1 in 15.” (C, 08:30)

• On Market Confidence in Deal-Making:
  “CEOs are very optimistic that if they want to announce something, they're going to get it done. That’s a different dynamic.” (C, 12:17)

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Important Segment Timestamps

• [00:39 – 01:49]: Mario Gabelli on Netflix’s withdrawal, the deal’s outcome, and investor implications
• [02:04 – 03:30]: Gabelli’s thoughts on Netflix’s future strategy and global content leverage
• [03:36 – 04:40]: Current M&A dynamics, arbitrage prospects, and lessons from recent deals
• [05:00 – 06:30]: Investment opportunities in industrials and corporate spin-offs
• [07:12 – 08:48]: The valuation and structure of sports franchises and live events companies
• [09:49 – 10:46]: Most undervalued sports plays and the upcoming World Cup effect
• [11:07 – 12:33]: Reflections on the changing climate for M&A and speculation on revived deals

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Conclusion

Mario Gabelli provides a masterclass in value investing and the current fervor in corporate deal-making. He underscores the importance of strategic M&A, spin-offs, and the undervalued potential of both traditional industries and sports assets in a rapidly consolidating market. For investors, Gabelli’s insights offer both specific plays to consider and a broader philosophy for navigating financial engineering opportunities, in line with his hallmark value-driven approach.

Transcript

[A]

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[B]

I am now pleased to welcome to the show for an exclusive interview Founder, chairman and CEO of Gabelli Funds, Mario Gabelli. Mario, we're so pleased to have you here on, on a week, which maybe is the last week we're going to be talking about the Warner Brothers Discovery Netflix deal. Now that Netflix has bowed out and it's paramount reigning as the winner, you have holdings of all of these stocks and you're a close follower of media deals. Were you surpr to see Netflix fold and bow out as quickly as it did?

[C]

Well, it wasn't exactly quickly. On the other side, somebody always wins, somebody always backs out. And it was obvious that unless they matched the materially higher proposal and the simplification of the proposal and the timing of, and adjusted their deal for the timing of getting my cash back for my clients. So the winner was Zaslav. David conducted an auction, stock has done extremely well. So we thank him significantly for that. And now the question is, for Netflix, their stock is also. It was down to 78. It was up to 96 the other day. And so there are a lot of individual winners here. For all of those involved in this bidding war,

[B]

I say, I mean, what does Netflix do now, Mario, or what would you like to see them do now? They have a nice little $2.8 billion breakup fee. Do you think that now they don't have Warner Brothers Discovery? Would you like to see go after various IP and things of that nature?

[C]

The notion of taking their streaming and delivery globally and looking at how much they're spending on content of $20 billion. Let them bring the content and show that they're willing to keep it in the theaters for that 45 day window. The second thing I would like them to see is to learn Japanese and think about knocking on Sony's door because of the enemy that Sony is doing and figuring out a way to partner on that. For example, Sony's buying, not getting into

[B]

that one right now. No, go ahead, please do. I mean, should they buy something from Sony, just a partnership, what would you propose?

[C]

I'm not proposing anything. And you know, this is not Right now my focus is for my clients that are taxable, make sure they're long term to start thinking about looking at other opportunities for their Warner holdings. And right now there's so many that will be announcing financial engineering. For example, you had Janice on earlier and that is another example from wearing an arbitrage hat. You know what, since you mentioned that, we wrote a book and it's now in about eight different languages on M and A, one of the few books written and then we did a follow up and that deals with like Elliot. What is he doing in Tokyo? Do you want it? It's free. And Kate Welling and I prepare the one on Merger Master. So there's a lot going on and we expect a lot more going on. So this is terrific time. M and A is vibrant, unlike last year. Last year, for example, someone sabotaged the deal for a company called iRobot. That stock was in the 50s, today it's $0.06. The arbitrageurs are not experiencing those potholes because of the more attention of, you know, the benefits of globalization, the benefits of consolidation. And you're going to see more financial engineering splitting off companies. Why shouldn't I do a spin off and look at what does that mean for the shareholders? Because that's the benefit of not paying the tax. So there's a lot going on. This is terrific time.

[B]

All right, well tell me Mario, I love this. This is perfect time for you to be on the show to your share. Your, your investors get the money from Warner Brothers discovery. You mentioned something Netflix might do. Janice Henderson, what would you say? Here's the top pick. Here is where the corporate transformation and financial engineering is going to happen and I want to get them into that arbitrage. What is your top call?

[C]

If you want to get into Harvard College in there and 20 years from now all you want to do is make 8% of CAGR and have a 529. On the other side of the coin, I'd rather see them go to the University of Virginia

[B]

and amen.

[C]

So from that point of view, whenever someone wants to allow individuals to in a free market system with all of the flaws, with the rule of law, with all the flaws, what you're talking about is meritocracy and how do we finance that? So that's important. And you saw some ideas from Dell, you saw some ideas for the 529 and 401ks and so on from my point of view. Tomorrow you'll be an announcement for a company called Myers located in Akron, Ohio. Like 40 million shares of a $23 stock they have. I started following it because they have an auto parts distribution business. Right now there's 1 billion vehicles on the road. Those 300 million vehicles on the road in the United States. Four tires per vehicle more or less. So that's 1.2 billion opportunities to sell products. And the average age of the vehicles are getting older. So what companies help the tire being replaced? What, what happens when there's a lot of snow for the first time in a long time? What happens if there's ice? So these kind of razor, razor blade type businesses are very attractive. And that would be a company that we're looking at very closely. We own it for a long period of time. There's so many like that. For example, you saw the spin off from Comcast of Versant. That stock was drubbed mercilessly by the index fund selling it and the stock for example got as low as 27 8. It was a spin off Financial engineering gate is a great opportunity to sit there with a basket and buy it because we looked at the fundamentals that Mark Lazarus running it is going to do a very good job of harnessing those values. So those are the things that we like particularly where the index funds.

[B]

Mario.

[C]

So yeah, particularly on finished spin offs.

[B]

And I was going to say you are, you are the ultimate value investor and you have been throughout your entire career. Let's talk about where the other value might be unlocked. You were talking about.

[C]

I'm sorry did you say all this

[B]

but MSG Sports I said one of the best. That's not what I said. Mario, you're a veteran of this industry. I know you like as well

[C]

of like Buffett, you know any event MSG Sports basically there's, there's 24 million shares. The Dolan family owns 4 plus million but they have control of the vote. Before used to have a Jimmy Dolan discount but when the spheres got which was a spin off has gone from like $30 to $120 or $110. They're saying that hey, this is a creative individual. He is not going to sell the Knicks and o' Rangers but he's splitting them off as two separate companies. Assuming they go ahead with this dynamic. And then the question is will he sell a piece of each holding company and then do what with it? So those are the things that we like. And tonight is a big night for the Knicks because they're playing a team out of Oklahoma and they did beat the team out of Toronto last night. So we'll see the Rangers are not doing well, but that's okay. The values are on.

[B]

Mario,

[C]

we are owners of Madison Money on.

[B]

Is it OKC or the. Hey Mario, do you think that that does enough to unlock the value splitting the Rangers and the Knicks or would you like to see more? Do you want to see something being sold? Is this the most logical deal to get that?

[C]

You know, you just saw the Miami Dolphins. Somebody said they sold a piece of it at a valuation of X. The notion of having sports franchises, whether it's the NFL, whether it's MS, the NBA, the NHL or the NFL. They allow 10% of that NFL to be owned by GPL and they structure LP interest. You know, we are have a fund that is going out and buying all of these companies in live events and basically experiences. So they, for example, going to a Formula one racetrack, for example, watching worldwide wrestling. Which are the companies involved and how do you buy them and which ones are. We can buy and bundle them together so we don't have to pay to 1 in 20 or 1 in 15. That a structure does and locks it up. So that's what we're thinking about every day. And we have a conference coming up in June out X number in terms of sports and entertainment. We do a lot of conferences like that that the world is invited.

[B]

Hey Mario, you also are involved in a lot of different publicly traded sports stocks. I know it's something you like. Again, unlocking value. What do you. What do you think is the most undervalued right now among your holdings when you look out that you maybe want to add to in the sporting world?

[C]

Well, what's going to happen? It's great question, I appreciate that at what are we going to see in the next three months? Obviously with some challenges on a global basis is the World cup soccer. We call it soccer, the world calls it football. There's a company called Manu. Manchester United, the Glazers own control of the vote. They sold a piece to an individual by name of James Radcliffe. He owns 20 odd 9%. And somewhere in the next 12 months they're going to be able to figure out whether they want to monetize that asset for their own interest or monetize it because the world is going to be interested in quotes in soccer. And so those are things that you think about what other soccer teams are there? Okay, so man, you has 175 million shares. The stock is trading. I can see it now on your screen about 1750 or $1718. And you know, why not this Just be a punter and put some down on it.

[B]

Hmm. Okay. Just to wrap things up, Mario, and given what a great environment it is to one read all of your deals books but to play them in this market and do the corporate arbitrage as you do so well, are you thinking right now about deals that might happen that couldn' never even have been dreamed of in past administrations. How different is it this time around?

[C]

No, it's not that they weren't dreamed about in the last administration. And a free market system with all the flaws and rule of law with all the flaws you constantly looking at what do you want to do globally and what do you want to do domestically to get synergies to grow your business. Okay. And as a result of that more feel that comfortable and this is an important point that it will close. They will hopefully go through and go through the hearts God, Rodino, the justice DOJ rules. And by the way, those rules are global. And so you're starting to see more of an approach saying, you know, one in one equals three. That's not so bad. As opposed to watching capri drop from $40 to 19 or 20 or a sportsman's warehouse dropping from 15 to a $30. So the sportsman and those that were busted deals, you know, we start looking at and particularly spin offs of companies that feel that they can grow better or get a clearer multiple with regards to what's left in the company. That is a very important part of the of the dynamics of enterprise and M and A. And and so the CEOs are very optimistic that if they want to announce something, they're going to get it done. That's a different dynamic. They always wanted to do it. Now they feel more comfortable in saying

[B]

it's going to get done. Wait, so you think that there were deals that have fallen by the wayside that you think will be revived? What are those?

[C]

We have several of them that we're focusing on. So we're working on that. We'll see some of the other ones that where companies bought them like sjf. Smuckers bought a company at the wrong timing and to figure out how that could also maybe be re examined. In the case of Myers, they bought a company called Signature, one of the competitors of Signature, which puts down on construction sites a layer of wood or layer of composite plastic or something like that. Composite wood that allows them to do work and construction work. A company out of Texas has gone from $5 to $15. And so the world is starting to see that Con Expo right now. Is going on in Las Vegas and individuals and companies are looking at those kind of dynamics. So that would be another example. Myers, for example, another company in Buffalo, New York, which I've liked forever as called National Fuel and Gas. They own land in the Marcellus. And with LNG being exported, with NAT gas being a source of power for the data centers in terms of electricity, they could sell a piece of their utility business.

[B]

It's a hot trade. Hey, Mario, I'm just going to have to jump in. I hate to do this because we're up against a hard break, but you are fantastic. Please come join us again soon. The one and only Mario Gabell, founder, chairman and CEO of Gabelli Funds.

[C]

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