Warner Bros., Paramount Talk Merger

[AndyDursin]

This would be a big deal and an obvious coupling. Sadly it's all bad news for consumers as we're headed to a world where a handful of mega-corporations is going to be in charge of the globe's entertainment -- but on the other hand, if anyone wants an alternative to Disney it's a way to keep both alive.

https://variety.com/2023/biz/news/warne ... 235847958/

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 on Tuesday in New York to discuss a possible merger, sources said. Zaslav also has spoken to 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 potential combination of the companies could not be learned. 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 Terminator, Transformers, Mission Impossible, Top Gun, A Quiet Place, Teenage Mutant Ninja Turtles, The Godfather, Paranormal Activity, Scream and Star Trek film franchises.

A merged WBD-Paramount Global would also be expected to combine their TV operations. 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 Communications’ 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 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.

[John Johnson]

I rarely watch Max, as I find the layout of the channel terrible. I much preferred the old HBO Max, where could find what you want, without having to trawl through all the lightweight dross that Max has. As for Disney+, I cut the cord with them several months ago. I just wasn't getting the value for money from them.

[AndyDursin]

I thought Chris asked a question on here about licensing but I'll respond even though it seems to be gone!

How that ends up working out will be interesting. Paramount licenses a lot of their catalog now for Blu-Ray and 4K UHD to Shout Factory, Kino Lorber and other labels. Would that change? Hard to know. If the companies just become one big entity, or if the Paramount end operates to some extent on its own, we'll have to see. MGM continues to license out catalog (movies, film scores, etc.) to various labels, even though they've been bought by Amazon. So that's the reverse example of, say, Disney simply buying Fox and shutting it all down basically.

It's a merger so redundant parts of the business might (will) be combined -- it'll just be interesting to see what transpires if it does. At least both are still solid proponents of physical media and see the value in that.

Either way I don't think it's good there will be basically one less studio here -- again, Fox is gone, Paramount and WB would combine -- but that's how it's breaking down and it's bad for everybody...except at least it's not Disney making the purchase!

[Chris Shaneyfelt]

Thank you for your response, Andy, and for sharing your thoughts. I hadn't thought of MGM still licensing catalog titles even though they are under Amazon. I hope Paramount would have the same liberty (and interest) to do so. Yes, it is a great relief they aren't being acquired by Disney!

I'm sorry I deleted my question from the forum.

[AndyDursin]

Don't be sorry! But no reason to delete, every post is a good one and I appreciate it!

[Chris Shaneyfelt]

Thank you, Andy!