Warner Bros. Discovery-Paramount Update: What’s Going on With the Merger and is the Deal Dead or Alive?





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Warner Bros. Discovery and Paramount made waves in the entertainment industry when the CEOs of the two companies reportedly talked about a potential merger in December.

A deal would combine two of the largest media companies in the world, bringing together powerful studios, cable networks, and one of the major national networks. One of the biggest appeals is the potential combination of streaming services Max and Paramount+, each of which are second tier players behind giants like Netflix and Amazon Prime Video. It’s also met with some concern that further consolidation among the studios would lead to poorer quality movies and shows down the line, with one less studio able to fund creative projects.

But since that chatter erupted in late December, things have quieted down. The potential for a possible deal is still having ramifications around the industry. Babylon 5 creator J. Michael Stracyznski, for example, said that he’s “waiting for the potential Warners/Paramount mini-merger to figure itself out, so WB is waiting until the dust settles before going to streamers.”

But that doesn’t mean other deals haven’t been flying around. Paramount is the subject of not one, but two different bids. One is reportedly by Skydance Media, which already works with the media company on films like the Mission Impossible franchise.  Allen Media Group confirmed to Cord Cutters News it had made a $30 billion offer for Paramount as well. On the flip side, Warner Bros. Discovery just partnered with FOX and Walt Disney’s ESPN to create a new sports joint venture — with Paramount or its CBS Sports no where in sight.

So what’s going on Warner Bros. Discovery and Paramount? Here’s everything we know.

How did this get started?

Axios broke the news that Warner Bros. Discovery CEO David Zaslav and Paramount Global CEO Bob Bakish met in New York to talk about a possible merger. The talks were reportedly held at Paramount’s headquarters in Times Square and lasted several hours.

Why would the two want to get together?

The media industry is a rough stretch and have been consolidating for years. Warner Bros. Discovery itself is a combination of Warner Media and Discovery, and the current form of Paramount was created from the merger of CBS and Viacom.

Part of the issue is the media industry bet big on streaming, especially once the pandemic hit. That turned out to be a bad wager, with those services costing the company billions of dollars. Paramount+ loses money, and Max is only now “getting slightly profitable.”

How would a combination help?

Pooling together Max and Paramount+’s subscriber base would give it a larger pool of revenue. As of the third quarter, Max had 95.1 million subscribers and Paramount+ had 63 million. While there’s likely some overlap, the combination would get it closer to Netflix’s 260.3 million global subscribers.

The combination of their respective media libraries would also help it compete against Netflix and Prime Video. Both are also aggressive in combining live TV services to their platform, from Max offering sports via the B/R Sports package, and Paramount+ offering the Super Bowl.

Theoretically, all that content would serve as a bigger draw. With so many services available today, having more high-profile content could only help.

What do the two sides own?

Warner Bros. Discovery owns several key of the top cable networks, including CNN, TNT, TBS, Food Network, Discovery Channel, and TLC, and premium cable channel HBO. It owns one of the largest and most history studios producing film and television, TNT Sports, and DC Entertainment, the home of Superman and Batman.

Paramount owns Paramount+ and Pluto TV, as well as the CBS Network and more than two dozen stations. It also own cable networks like Comedy Central, BET, and Nickelodeon, and the Paramount film studio.

What’s the downside?

Critics came out of the wood works to complain about the possible merger. Wall Street didn’t seem to like it, saying it would be a bad idea for Warner Bros. Discovery to take on even more debt to acquire Paramount. The media consolidation we have seen has already resulted in more expensive streaming services with disappearing content, and it’s likely we’ll see more if the two get together to become an even bigger media giant.

Hollywood creatives also bemoan the idea that one less studio means fewer chances to get projects green lit, and the larger company would be more focused on “safe” projects like blockbusters at the expensive of more creative endeavors.

Any other negatives?

There’s also the prospect that regulators would step in. The years of consolidation mean there are fewer players than ever, and Warner Bros. Discovery getting even bigger may trigger the U.S. Justice Department to take a look at any deal. If nothing else, the combined company would likely have to sell some of its assets.

So what’s going on now?

Not a lot. As Stracyznski noted, the possibility of a deal has put his project on hold, and is likely something other Hollywood writers and directors are seeing. Even if no deal actually goes through, there are likely folks sitting in limbo until more clarification comes.

Given the negative reaction the deal has garnered so far, it’s possible no deal could happen. Paramount, after all, has two other suitors in Skydance and Allen Media Group, and could go in an entirely different direction.

But no one has outright shut the door on the deal, so the speculation continues.

We’ll continue to update you when we hear more.

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