Warner Bros. Discovery (WBD) and Paramount Global held merger discussions on Tuesday, signalling a possible tie-up between two of the largest US broadcast outfits.
Deadline has reported that Paramount CEO Bob Bakish and WBD CEO David Zaslav have met for “preliminary” merger talks, according to sources close to the companies.
Rumours of a potential Paramount sale first arose last week, when sources confirmed that media mogul Shari Redstone was in talks to sell a controlling stake in National Amusements, the parent company of Paramount Global.
This week, the sources told Deadline that Redstone was on a “listening tour” to assess her options in selling some of National Amusements’ TV assets. She has reportedly met with Skydance, RedBird Capital and WBD as potential suitors.
Analysts estimate that a sale of Paramount Global’s TV business, which includes MTV, CBS and Showtime, could generate $13.5 billion.
WBD is said to have hired bankers to explore the deal, although it would be prevented from entering into a transaction until April 2024; the two-year expiry of the WarnerMedia and Discovery merger that formed the combined entity.
The streaming wars: round two
A merger between the two companies would have a huge impact on a TV industry in a state of transition. On the linear front, WBD is home to news network CNN, while Paramount operates CBS News. A merged TV business could therefore form a combined news giant.
And the deal could point to further consolidation on the streaming side. Both firms have already combined their brands within their SVOD offerings; WBD folded its Discovery properties into the Max streaming service, while Paramount has merged Showtime with Paramount+.
But with Hulu now being rolled into Disney+, the streaming wars are heating up once again, and a combined WBD/Paramount business could look to compete with the likes of Disney and Netflix.
The talks come at the end of a turbulent two-year period for WBD, which has shelved a number of high-profile film projects, and closed the CNN+ streaming service after just one month in operation. On the company’s latest earnings call, Zaslav said the Max service was losing “billions of dollars”. Max shed 700,000 subscribers during Q3, while WBD’s TV ad revenues shrank 12 percent YoY.
Paramount’s TV revenues also fell by 14 percent, but its streaming business was much healthier, according to the company’s earnings update. As well as adding two million global subscribers, the streaming segment halved its losses during Q3, suggesting its digital investments had “peaked ahead of plan.” Ad sales across Paramount+ and Pluto TV, the company’s FAST platform, also climbed 18 percent.
As both companies pivot away from a reliance on falling linear revenues, bolstering their streaming ambitions could forge a path forward in the shifting broadcast landscape. Despite its struggles, WBD has 95.1 million streaming subscribers, providing a considerable distribution footprint for Paramount content. And last month Zaslav said the company would pursue “growth opportunities” in the years ahead.
