Warner Bros. Discovery in talks to merge with Paramount Global

Warner Bros Discovery and Paramount Global are in early talks to merge, according to multiple media reports.

The deal would bring together two of Hollywood’s “Big Five” studios, with Warner and Paramount’s combined market value standing at $38bn (£30bn).

Talks are believed to be at an early stage and a deal may not happen.

Warner chief David Zaslav and Paramount boss Bob Bakish discussed a possible deal over lunch in New York this week, according to news site Axios.

Streaming of shows and films has meant that traditional media companies have had to invest quickly to compete with the likes of Netflix, Amazon Video and Apple TV.

Warner and Paramount have had to commit to some deep cost-cutting, as they try to minimise losses running into the billions of dollars from their video streaming services.

As a result their stock prices continue to trade well below their highs in the early days of streaming.

According to Axios, the chief executives discussed how each company’s main streaming service, Paramount Plus and Max (formerly HBO Max), could merge to better take on rivals Netflix and Disney Plus.

Paramount is under a lot of pressure to find a buyer or strategic partner because of its levels of debt accrued in recent years whilst bulking up its streaming service.

Analysts said Warner Bros, the company behind this year’s blockbuster Barbie, has a slightly better cash position, partly due to some shrewd mergers.

Last year, AT&T’s WarnerMedia unit and Discovery merged to become Warner Bros Discovery, with a portfolio that included Discovery Channel, Warner Bros. Entertainment, CNN, HBO, Cartoon Network and franchises such as Batman and Harry Potter.

Paramount owns CBS, the BBC’s US partner.

Media reports suggest that more consolidation is coming in the industry.

The dominance of Netflix and other big technology companies in the media space is undeniable – not just in terms of their financial performances but also through their extensive portfolios of shows and subscriber numbers.

Netflix’s crackdown on account-sharing in these months led to new accounts created, mostly in the US, Canada and the Europe, bringing its total number of subscribers to 247.2 million globally.

In comparison, Paramount Plus total subscribers stand at 63.4 million and Warner Bros Discovery 95 million as of November 2023.