Warner Bros. Discovery and Paramount are in talks to merge. While an official deal is yet to be made, reports are already circulating that the union of the two companies wouldn’t be a success.
Earlier this week, Warner Bros. Discovery CEO David Zaslav met with Paramount Global CO Bob Bakish met to discuss a possible merger along with combining their respective streaming services, Paramount+ and Max.
Until we know how advanced these talks are, there are more questions than answers. If the media giants were to join, it’s unclear who would lead the newly formed company, and what the union would mean for the larger TV and film landscape, as well as the companies’ respective debts and profitability projections.
If a merger were to come to pass, it would mean several big changes. CBS News would combine with CNN, and CBS Sports would combine with Warner Bros. Discovery Sports, subsequently bringing all March Madness games under one owner.
Variety reported that Nielsen data and MoffetNathanson analysis said together Paramount and Warner Bros. Discovery would hold 35% to 40% of linear television time viewed in the U.S.. The size of this share could raise regulatory red flags. To solve the problem, some cable TV networks could be dropped. Reports indicate that BET is already in talks to be sold.
When new broke of the early talks, shares for both Warner Bros. Discovery and Paramount dipped more than 5% and 2.8% respectively, according to Variety. The report cited MoffettNathanson analyst Robert Fishman saying that “desperate times for media companies are leading them to explore desperate measures.”
The last few years have been challenging for the streaming industry, and a majority — if not all — platforms have struggled to maintain or achieve profitability. As a result, more streamers have looked or opportunities to consolidate. For example, the Disney-Hulu app — which combines Disney+ and Hulu — is set to launch next year.
However, analysts think the financial tides could turn for providers in the next 18 months.
Ampere Analysis predicts Warner Bros. Discovery will achieve profitability by the third quarter of 2024 followed by Paramount+ in the first quarter of 2025. It’s unclear if those projections would change in the event of a merger. According to Variety, the combined company would have an estimated $97 billion enterprise value along with $70 billion in debt.
It remains to be seen how the talks between the two companies will progress, but if a merger happens, the streaming, TV, and film industries are going to see a big shakeup.