Paramount ends Warner Bros. Discovery merger talks, continues mulling sell-off

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Paramount ends Warner Bros. Discovery merger talks, continues mulling sell-off

Paramount+

Warner Bros. Discovery (WBD) and Paramount Global are no longer considering a merger that would have put the Max and Paramount+ streaming services under one corporate umbrella. Per a CNBC report today citing anonymous “people familiar with the matter,” WBD and Paramount had been mulling a merger for “several months.”

In December, reports started swirling about WBD and Paramount discussing a potential merger. Axios even reported that WBD CEO David Zaslav and Paramount CEO Bob Bakish met in person for “several hours” and that Zaslav also met with Shari Redstone, the owner of National Amusements Inc. (NAI), Paramount’s parent company. Now, CNBC reports that discussions between the media giants “cooled off this month.” Paramount and WBD haven’t commented.

When news of the potential merger dropped, it was unclear what sort of regulatory hurdles the media conglomerates might have faced if they tried becoming one. Combined, the companies would have had the second-biggest streaming business by subscriber count, trailing Netflix.

Debt was also a huge concern. Paramount is $14.6 billion in debt, per its earnings report shared today. WBD was $40 billion in debt at the time of merger talks but said it was eyeing a profitable streaming business. WBD is still in debt currently but reported this month that its streaming business became profitable, making $103 million for the year. Max’s most recent subscriber count is 97.7 million compared to 67.5 million for Paramount+.

Merging with Paramount would have meant WBD added another company with struggling legacy media assets to its portfolio. It also would have meant buying a streaming service that has yet to turn a profit as of this writing. Paramount’s streaming business lost $1.66 billion in 2023, it reported today.

Merger still possible

Although things with WBD reportedly didn’t work out, Paramount is still seriously considering a merger. CNBC reported that the company formed a committee and hired a financial adviser focused on analyzing potential bids for all or parts of the company.

Suitors recently tied to Paramount include Byron Allen and, reportedly, Skydance Media. The David Ellison-owned company is “still performing due diligence on a potential transaction,” CNBC said today, citing two of its anonymous sources. In January, Bloomberg reported that Skydance made an all-cash offer for NAI.

Paramount could also try to bundle its services with another company’s, which could attract subscribers to Paramount+ and help Paramount save money. It has already considered bundling Paramount+ with Comcast’s Peacock through a partnership or joint venture, The Wall Street Journal (WSJ) reported earlier this month. But Comcast doesn’t want to buy Paramount, per one of CNBC’s anonymous sources from today’s report.

Some streaming rivals to Paramount+ are already bundled together (such as Disney’s Disney+ and Hulu) and exploring joint ventures. As streaming services race to achieve the sort of profitability that Netflix has, big strategic moves, such as mergers, partnerships, and price hikes, are expected soon. Meanwhile, subscribers remain worried about potential fallout, which could result in monopolistic practices that limit consumer options.

This article was updated to include information from Paramount’s latest earnings report. 

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