Warner Bros. Discovery, Paramount Global Contemplate Potential Merger: Report
Warner Bros. Discovery Chief Executive David Zaslav held talks with Paramount Global Chief Executive Bob Bakish about a possible merger between the two media giants, CNN reported, quoting sources. The potential merger could facilitate the emergence of a media juggernaut, which could transcend the media industry by streamlining the services being provided by Warner Bros. and Paramount studios, as well as CBS, CNN, and other cable television assets.
According to the report, Zaslav has initiated the discussion with Bob Bakish despite having embargoes on additional acquisitions or mergers that emerged during the $43 billion merger between WarnerMedia and Discovery in order to avoid tax implications. If WarnerMedia Discovery engaged in an acquisition or merger before April 2024, which marks the two-year anniversary of the merger, it would have major tax implications.
However, Zaslav aims to enrich the content offered by Warner Bros. Discovery with the merger. Meanwhile, Paramount is seeking a strategic partnership with Warner Bros. Discovery with Shari Redstone, the family heiress of Paramount’s parent company, National Amusements, offloading her stake in the company. According to the report, Zaslav has expressed interest in buying out her stake in the company.
According to the report, tech giant”s entry into the entertainment business has created an impasse in the industry, with big media houses being forced to compete with them. The consolidation in the industry was also reflected in the equity market, with Warner Bros. Discovery’s (WBD) stock and Paramount’s stock falling 5.7% and 1.4%, respectively, after their possible merger plans were reported.
“I think it speaks to the panic,” industry analyst Rich Greenfield, co-founder of LightShed Partners, told CNN on Wednesday about the merger talks. “The industry is in for a very challenging future. They’re going to try to get bigger to compete in streaming.”
The proposed merger is expected to face regulatory hurdles as the Biden administration has shown resistance to consolidation, challenging a record number of proposed mergers and acquisitions, according to a recent Federal Trade Commission report.
