Warner Bros. Discovery is reportedly in merger talks with Paramount Global, according to a report from Axios. WBD CEO David Zaslev reportedly met with his counterpart Paramount Global CEO Bob Bakish at Paramount headquarters in New York on Tuesday to discuss combining the Paramount+ (including Showtime) and Max streaming services, which would up the competition against the likes of Netflix and Disney+.
Zaslev also reportedly talked with Paramount owner Shari Redstone as well, Axios said. WBD has reportedly hired bankers in preparation for a possible deal and it’s not clear yet whether WBD would acquire Paramount Global outright or its parent company National Amusements Inc.
Combining the two would create a global streaming juggernaut. WBD has a global footprint and could create a more international market for Paramount, which has been expanding its the availability of its programming overseas. WBD’s CNN already has a 13-year partnership with CBS News—so combining the two would potentially be easier and provide a much larger news entity that could be more competitive to Fox News.
In its latest earnings report last month, Paramount reported that its Paramount+ streaming service added 2.7 million net subs for more than 63 million globally. Overall, Paramount+ revenue grew 61% in Q3 2023, driven by subscriber growth and increased advertising revenue as Paramount+ global ARPU expanded 16% year-over-year.
However, debt is piling up as the company reported that it lost $238 million in its first quarter after combining Showtime with Paramount+ earlier this year. That’s an improvement over losses of $424 million in Q2 and $511 million in Q1 and Paramount executives believe the losses have peaked.
Worldwide, Netflix stands alone atop all streaming services with more than 247 million. Amazon Prime comes in second at with an estimated more than 200 million and Disney+ with just over 150 million. Max is #4 with 95.8 million, followed by Paramount+'s 63 million. Combining the two would create a combined entity of 159 million, and make it second only to Netflix.
Despite having merged Warner Bros. with Discovery in 2022, the combination of the two has has not gone as well as executives liked, with debt issues stymieing growth.
That debt problem could be a big hurdle to such a merger, according to William Cohan, Puck News Founding Partner, who told Yahoo Finance yesterday:
“For Warner Bros. Discovery, with its $43 billion in debt, and Paramount's $15 billion in debt, and the overlap in terms of business lines, it's going to be difficult, strategically and regulatorily, to get this through. But David Zaslav is nothing if not ambitious. He clearly doesn't think he's done yet in Hollywood. He wants more in Hollywood."
Richard Cooper, research director at Ampere Analysis told TV Tech sister brand TVBEurope that although any merger would have to pass muster with regulators, “it would not be unreasonable to expect this deal to also be approved.”
“Though it would reduce the number of major U.S. studios, a key consideration is the emergence of other major domestic content producers to consider such as Netflix and Amazon Prime,” he said.
