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Warner Bros Discovery and Paramount Global held talks for a potential merger that would be the tie-up of the two biggest media companies in the world, according to media reports.
The talks are in a “very early stage” and the deal may not come to fruition, people familiar with the talks said.
Warner Bros boss David Zaslav and Paramount chief Bob Bakish met on Tuesday in New York City to discuss a possible deal, as first revealed by Axios.
The mega merger would combine the two of the major studios in Hollywood’s “Big Five”, resulting in a total market value of $38bn (£30bn) for Warner and Paramount.
The moguls of the two companies discussed over lunch in Paramount’s headquarters in Times Square and the meeting lasted several hours, sources told Axios.
The pair explored how the two companies would complement each other to compete against rival platforms. One potential avenue is the consolidation of their main streaming services, Paramount+ and Max (formerly HBO Max), to enhance their competitiveness against streaming giants like Netflix and Disney+.
Mr Zaslav also held a meeting with Paramount chair Shari Redstone, whose family company holds a majority stake in Paramount, the entity that owns CBS and other television assets.
David Zaslav was the second highest-paid CEO for 2021, as calculated by The Associated Press and Equilar
(AP)
The deal will see CBS News combined with CNN and CBS’ crime dramas, such as “NCIS” and “Criminal Minds” teaming up with Investigation Discovery and TruTV.
The two companies have faced challenges recently as consumers transitioned from cable-TV subscriptions in favour of a new wave of streaming services such as Netflix, Amazon Video and Apple TV.
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The operational costs of streaming businesses are high, and they are yet to fully compensate for declining profits at traditional networks. Notably, programming expenses, particularly for sports content, have been on the rise.
Warner and Paramount have been forced to implement significant cost-cutting measures in an effort to mitigate losses amounting to billions of dollars from their video streaming services.
This has led to their stock prices trading significantly below the peak levels observed in the initial stages of the streaming era.
The marquee of the Los Feliz Theatre features the films Barbie and Oppenheimer in July 2023
(Invision)
Paramount is facing substantial pressure to seek a buyer or forge a strategic partnership after it reported a long-term debt of $15.6bn.
It is considerably less than Warner Bros debt of $43.5bn. However, in terms of market value, Warner Bros. Discovery takes the lead as the larger entity, boasting a market capitalization of $28.4bn as of the close of trading on 20 December, in contrast to Paramount Global’s $10.3bn.
Last year, AT&T’s WarnerMedia unit and Discovery joined forces to form Warner Bros Discovery, in a $43bn deal consolidating a portfolio that encompasses Discovery Channel, Warner Bros. Entertainment, CNN, HBO and Cartoon Network.
The Independent has reached out to Warner Bros and Paramount for comment.
