Warner Bros. Discovery and Paramount Global have engaged in preliminary talks about a potential merger, a move that could reshape the media and streaming landscapes.
According to the first news report by Axios, the CEOs of both companies, David Zaslav and Bob Bakish, reportedly discussed the prospect in a lunch meeting held in New York. While representatives for Paramount Global and Warner Bros. Discovery did not confirm nor deny this, sources suggest that the discussions are at an early stage.
Warner Bros. Discovery is the result of Discovery Inc.’s acquisition of WarnerMedia from AT&T in April 2022. Meanwhile, Paramount Global was formed through the merger of CBS and Viacom in December 2019. If these media giants are considering combining their extensive assets spanning TV, film, sports, and streaming, industry experts predict a massive shift in the status quo.
Scoop: Warner Bros. Discovery (@wbd) in talks to merge with @Paramount
— David Zaslav met w Bob Bakish on Tuesday at Paramount HQ to discuss
— Zaslav also has spoken to Shari Redstone about a deal
— WBD has hired bankers
Story on @axios:https://t.co/ExGZisf3fu— Sara Fischer (@sarafischer) December 20, 2023
With the aim of achieving greater scale and operational efficiencies, the potential merger could position the entities to compete more effectively with streaming giants like Netflix, Disney+, and Hulu.
Key to the discussions is the idea of merging their premium streaming services, Max and Paramount+, to create a more formidable presence in the highly competitive streaming landscape. While Warner Bros. Discovery’s Max boasts 95 million subscribers, Paramount Global’s Paramount+ has 63 million subscribers. By comparison, Netflix has 247 million subscribers, and Disney+ has 105 million.
On the film front, a merged entity would see Warner Bros. Discovery gaining access to Paramount Pictures’ valuable franchises, including Terminator, Transformers, Mission: Impossible, Top Gun, Star Trek, Teenage Mutant Ninja Turtles, among many others. In return, Paramount Global would benefit from Warner Bros. Discovery’s film stable, which includes the DC Extended Universe films, Harry Potter, and Lord of the Rings franchises.
TV operations would also likely be integrated, with Warner Bros. Discovery’s cable lineup featuring CNN, HBO, TNT, TBS, and more, combining with Paramount’s networks, including CBS, Comedy Central, MTV, and Nickelodeon.
One area that Paramount Global would greatly benefit from the merger is video games. Paramount Digital Entertainment (formerly Paramount Interactive) has not had much success since its inception. On the other hand, Warner Bros. Games is one of the most robust video game publishing records in the industry, counting development studios like Rocksteady Studios, NetherRealm, and Avalanche Software in its portfolio.
While the terms of the potential merger remain undisclosed, Paramount Global reported long-term debt of $15.6 billion as of Q3, significantly less than Warner Bros. Discovery’s $43.5 billion. However, in terms of market value, Warner Bros. Discovery leads with a market capitalization of $28.4 billion compared to Paramount Global’s $10.3 billion.
The potential mega-merger between Warner Bros. Discovery and Paramount Global is seen as a significant development that may trigger further industry consolidation. Media analysts suggest that collaborations, mergers, and acquisitions are becoming essential strategies for survival in today’s market pressures.
The streaming industry, facing challenges such as stiff competition and slowing subscription growth, has witnessed an increasing need for consolidation. The potential mega-merger between Warner Bros. Discovery and Paramount Global is seen as a significant development that may trigger further industry consolidation. Media analysts suggest that collaborations, mergers, and acquisitions are becoming essential strategies for survival in today’s market pressures.
While there are concerns about potential consequences for consumers, including fewer choices and higher prices, some experts argue that consolidation via corporate merger might lead to more competitive pricing and flexible subscription options. The hyper-competitive nature of the streaming industry, coupled with the imperative to retain subscribers, could result in a win-win situation for both streaming consumers and the combined entity.
As the media industry awaits further developments, the discussions between Warner Bros. Discovery and Paramount Global mark a crucial moment that could shape the future landscape of streaming services and media conglomerates.
But what do you think about Warner Bros. merging with Paramount? Is this too much too soon after Warner Bros. merged with Discovery? What do you think about the potential irony that Warner Bros. will own Paramount which started the Marvel Cinematic Universe before Disney bought out the rights?
