WBD, Paramount reported to have held preliminary talks over potential merger
US media giants Warner Bros Discovery (WBD) and Paramount Global are reportedly in early discussions over a possible merger deal.
US-based news outlet Axios, which was first to report the news, said WBD president and CEO David Zaslav and Paramount Global CEO Bob Bakish had met earlier this week in New York to discuss a potential deal.
WBD has hired bankers to explore ways to execute the deal, though it remains unclear whether WBD would look to acquire Paramount Global or its parent company National Amusements Inc (NAI).
Talks remain at a very early stage and there is no guarantee that any deal will come to fruition. Zaslav has reportedly also spoken to NAI owner Shari Redstone.
For WBD, the talks are taking place less than two years after it was formed following the merger of WarnerMedia and Discovery.Due to the way the transaction was structured (via a Reverse Morris Trust deal), WBD is unable to participate in most major M&A moves for a two-year period. However, that two-year period ends in April.
In terms of market cap, WBD is around three times as big as Paramount Global, with a market cap of US$28.4bn to Paramount’s US$10.3bn. Both have enacted sweeping lay-offs and restructuring over the past 18 months.
A deal would bring together WBD’s assets, which include streamer Max, premium pay TV network HBO, Cartoon Network, Warner Bros Television, CNN and its portfolio of factual networks with Paramount’s portfolio of assets which includes streamer Paramount+, US broadcast network CBS, CBS News, Paramount Television Studios, Nickelodeon, its movie studio and coveted studio lot.
2024 is expected to be a year of major consolidation across the content sector, with Paramount Global shaping up to be a target for several companies.
Last week, it emerged that David Ellison’s US-based Skydance is weighing a bid for NAI after holding its own talks.
Separately, All3Media, the production and distribution group jointly owned by WBD and John Malone’s Liberty Global, is also up for sale. Over the past six months, several companies have been rumoured to be closing in on a deal, including ITV, but most recently it emerged that RedBird IMI, the private investment company led by former CNN chief Jeff Zucker and Gerry Cardinale, is now in pole position to acquire the London-headquartered company.
While big M&A moves have been widely expected in 2024, merger talks between two of Hollywood’s biggest entities will likely cause concern among independent producers and creators as it would result in fewer outlets commissioning content. In particular, the Writers Guild of America (WGA) has been critical of how the major US players have consolidated in recent years, calling on anti-trust enforcers to prevent more of these mega-mergers from taking place. However, for both scripted and unscripted producers too, the prospect of more M&A-related industry disruption – and fewer doors to knock on – would represent a source of significant concern.
Following the Axios report, WBD’s stock price fell 5% to US$11.66 per share, while Paramount’s stock climbed very slightly to US$15.50 per share.
