The case examines the left hand side of the balance sheet: asset valuation. Drawing on a five act chronology of the bidding war and financial data from actual 10 K filings, students conduct a full DCF analysis of WBD. Key learning objectives include the drivers of free cash flow and firm value, the sensitivity of valuation to terminal value assumptions, the impact of investment needs on FCF, and best practices in financial modeling. A multiples based valuation provides a qualitative counterpoint for assessing the soundness of Paramount’s winning bid.
Discounted Cash Flow valuation; FCF calculation; M&A pricing; equity valuation; sensitivity analysis; continuation value; investment vs. FCF; Modigliani & Miller; capital structure theory; financial leverage; operating leverage; hubris; business model disruption.
- M&A
- bidding war
- Discounted Cash Flow analysis
- M&A valuation
- valuation multiples
- value drivers
- investments and FCF
- sensitivity analysis
- deal mechanics
- media and entertainment industry
- streaming vs. linear TV
- anti-trust risk
- survival by scale
- Q22026
