February 21, 2024

Warner Bros. Discovery and Paramount Global have held talks about a potential merger of the two media companies, Variety has confirmed.

Warner Bros. Discovery CEO David Zaslav met with Paramount Global CEO Bob Bakish in a lunch meeting Tuesday in New York where they discussed a possible merger, sources said. Zaslav also has talked with Shari Redstone, whose National Amusements Inc. owns a controlling stake in Paramount Global, about a potential combination of the companies.

Reps for Paramount Global and WBD declined to comment. Axios first reported the talks.

Terms of a possible merger of the companies could not be learned. Both companies have enlisted bankers but the status of the talks are described as very preliminary. As of the end of Q3, Paramount Global reported long-term debt of $15.6 billion, considerably less than WBD — whose debt load stood at $43.5 billion. But in terms of market value, Warner Bros. Discovery is the bigger fish, with a market capitalization of $28.4 billion as of close of trading Dec. 20 compared with $10.3 billion for Paramount Global.

Warner Bros. Discovery and Paramount would be looking to pool their assets, which span TV, film, sports and streaming, to gain greater scale and operational efficiencies. Specifically, WBD and Paramount would have an interest in combining their Max and Paramount+ premium streaming services to better compete with the likes of Netflix and Disney’s Disney+ and Hulu.

On the film side, Warner Bros. Discovery would acquire top-tier properties from Paramount Pictures, including such film franchises as Terminator, Transformers, Mission: Impossible, Top Gun, A Quiet Place, Teenage Mutant Ninja Turtles, The Godfather, Paranormal Activity, Scream and Star Trek film franchises. The Warner Bros. Pictures stable includes the DC Extended Universe films, Harry Potter and Lord of the Rings movie franchises.

A merged WBD-Paramount Global would also be expected to combine their TV operations. Warner Bros. Discovery’s cable lineup includes CNN, HBO, TNT, TBS, Discovery Channel, Cartoon Network, Food Network, HGTV, TLC and others. Paramount’s networks include CBS, Comedy Central, MTV, Nickelodeon and BET. Also this week, media mogul Byron Allen reached out to Paramount’s top brass to extend a $3.5 billion offer to buy BET Media Group, which includes BET, VH1 and the BET+ streaming service.

Warner Bros. Discovery was formed through Discovery Inc.’s acquisition of WarnerMedia from AT&T, a deal that closed in April 2022. Paramount Global is the result of the merger of CBS and Viacom — a combination driven by Shari Redstone — which closed in December 2019.

Redstone has been in talks to sell her shares in NAI, according to multiple reports. Redstone discussed a sale of her NAI stake with Skydance Media CEO David Ellison, who has teamed with private-equity firm RedBird Capital, and she separately met with departing Activision Blizzard CEO Bobby Kotick about a possible deal, the Wall Street Journal reported. The speculation is that a buyer of Redstone’s NAI stake would be interested in carving up Paramount Global into pieces, separating the studios group from the legacy TV business. Meanwhile, Paramount management has considered laying off more than 1,000 staffers in early 2024 to cut costs, per the Journal.

Sources said Warner Bros. Discovery senior execs felt like they had to move sooner rather than later to engage in discussions with Paramount Global after the reports about Skydance’s interest in buying out Redstone’s NAI stake.