Warner Bros. Discovery and Paramount reportedly in merger talks

Source: Warner Bros Discovery

Warner Bros. Discovery and Paramount are reportedly in early-stage merger talks.

In news first reported by Axios, Warner Bros. Discovery CEO David Zaslav reportedly has held a meeting with Paramount CEO Bob Bakish to discuss a possible combination, while Zaslav has also spoken with Shari Redstone, owner of Paramount’s controlling shareholder National Amusements.

No details have emerged about the structure of a possible deal. Previously, speculation that Paramount could be subject to a bid by Top Gun: Maverick producer Skydance and its shareholder Redbird Capital had centred on the possibility of a bid for National Amusements, which controls 80% of Paramount’s voting shares but only 10% of its capital. If merger talks between WBD and Paramount are confirmed, it is likely they were spurred on by the possibility of a deal involving Skydance.

David Zaslav (Source: Discovery)

A deal between Warner Bros. Discovery and the much smaller Paramount Global (both companies have suffered from downward pressure on their share prices and are burdened with debt) would have a significant impact on the entertainment business.

Paramount owns a large catalogue of movies, TV shows and other content that could help Warner Bros. Discovery (or whatever the combined entity is called) to better compete with Netflix and Disney. There would be numerous synergies resulting from a merger, not least with the possible combination of news operations CNN and CBS News.

However, a deal faces significant hurdles, not only in relation to the debt borne by both companies but for a host of commercial and regulatory reasons.

The pair have been struggling with declining linear viewership and revenue, leading to potential challenges in placing a valuation on their linear channels. A deal may also face regulatory and other obstacles.