In a potentially groundbreaking move, Warner Bros. Discovery CEO David Zaslav and Paramount Global CEO Bob Bakish reportedly held discussions this week regarding the prospect of a merger between their respective companies. While sources confirm that talks are in the early stages, the potential consolidation of these entertainment giants could usher in a new era in the industry.
Warner Bros. Discovery boasts ownership of major entities such as the Warner Bros. film and TV studios, HBO, and the Max streaming service, along with the former Turner and Discovery cable channels. On the other side, Paramount Global owns CBS, Paramount Pictures, and a robust array of film and TV studios, including cable channels like MTV, Comedy Central, BET, and Nickelodeon. The sheer scale and influence of these entities make the idea of a merger a significant development in the entertainment landscape.
While both companies have declined to comment on the ongoing talks, reports suggest that it is a very early stage in the negotiation process. The potential merger raises questions about the impact on the competitive landscape, regulatory considerations, and the consolidation of intellectual properties under one corporate umbrella.
If the merger were to materialize, it would bring together iconic franchises and intellectual properties, including Star Trek, DC Comics, Harry Potter, Mission Impossible, Transformers, SpongeBob SquarePants, and Looney Tunes, among others. This consolidation could result in a powerhouse of content creation, spanning various genres and appealing to diverse audiences.
One notable aspect is that such a merger might face comparatively less regulatory scrutiny than other potential combinations, given the lack of a domestic broadcast network in Warner Bros. Discovery’s portfolio. The businesses of both companies also appear to have significant synergies, with potential challenges arising mainly from the integration of their legacy film and TV studios.
What will the merger bring on the table?
The CBS broadcast network, along with its local stations, could fill a linear programming gap in Warner Bros. Discovery’s portfolio, providing additional support to its sports business. Furthermore, the merger could facilitate the inclusion of the NFL in Warner Bros. Discovery’s content offerings. CBS News and CNN, owned by Paramount and Warner Bros. Discovery, respectively, had engaged in merger talks in the past, highlighting the historical convergence of interests between the two companies.
From a streaming perspective, a merger could strengthen both companies’ positions, as their respective streaming services, Max/Discovery+ and Paramount+, could benefit from increased scale and a more competitive edge against streaming giants like Netflix and Disney+. With 95 million global subscribers for Max/Discovery+ and 63 million for Paramount+, a merger could help them better contend with industry leaders.
Both Warner Bros. Discovery and Paramount Global have faced challenges in recent years, with their stock prices trading below previous highs amid the competitive landscape of the streaming industry. The potential merger, driven by the vision of CEOs David Zaslav and Bob Bakish, could position the combined entity as a major player in the evolving entertainment ecosystem.
David Zaslav has a track record of strategic dealmaking, having orchestrated the takeover of Scripps Networks Interactive and the subsequent acquisition of WarnerMedia. Warner Bros. Discovery’s board member John Malone and Zaslav have indicated an interest in “opportunistic” deals, with Paramount often speculated as a potential target.
While Paramount Global is controlled by Shari Redstone through National Amusements, discussions about National Amusements’ controlling stake in Paramount have been rumored. Redstone has also explored the sale of “non-core” brands, including the book publisher Simon & Schuster and the BET cable channels.
Byron Allen, founder of Allen Media Group, has reportedly expressed renewed interest in acquiring BET assets, including BET, BET+, and VH1, with an offer of $3.5 billion in a letter to Paramount executives.