Assume you have a crush on two persons and discover that one of them likes you back. Do you start dating that person right away, or do you find out what the other person thinks as well?
That is where Warner Bros. Discovery is right now. The corporation has undertaken exploratory merger talks with Shari Redstone’s media giant, Paramount Global. According to persons familiar with the subject, Warner Bros. Discovery CEO David Zaslav met with Paramount Global CEO Bob Bakish on Tuesday to discuss the possibility of the firms merging.
The word “crush” may be overused here. This is not a case of two companies falling in love. It’s more of a necessity-based collaboration. In a streaming-dominated world dominated by Apple, Amazon, Netflix, and YouTube owner Google, neither company has a clear future competing for content. They only want to survive and increase the value of their stock.
However, if Comcast is willing, Warner Bros. Discovery may want to merge with NBCUniversal. NBCUniversal may have regulatory difficulties. It is unknown whether officials would authorize Universal and Warner Bros. to merge. They are the top two revenue-generating film studios in the United States this year. Despite being smaller than Warner Bros. or Universal, Paramount is consistently a top-five studio.
Comcast also owns the cable news station MSNBC, which may or may not pose a problem for regulators considering that CNN is owned by Warner Bros. Discovery.
The deal structure will be critical here. If Comcast spins off NBCUniversal in order to merge with Warner Bros. Discovery, Zaslav could conceivably benefit from debt-free earnings, which would help the combined company’s balance sheet.
That may be more appealing than taking on $15 billion in debt from Paramount Global. Warner Bros. Discovery has about $45 billion in debt and has fought all year to reduce its burden by increasing free cash flow. Purchasing Paramount Global may be considered a fresh start for Zaslav, who hasn’t earned many friends in Hollywood due to his aggressive cuts to both jobs and content spending.
It’s also likely that Comcast CEO Brian Roberts prefers to keep NBCUniversal and isn’t interested in doubling down on traditional media at the moment. According to a person familiar with the situation, NBCUniversal is not currently in merger talks with anyone. Comcast, Warner Bros., Discovery, and Paramount Global all declined to comment.
In general, Comcast’s NBCUniversal has assets similar to those of Paramount Global. They both have broadcast networks: NBCUniversal’s NBC and CBS’s Paramount Global. They each possess a number of decrepit cable networks. Bravo, E!, and USA are among the NBCUniversal brands. Nickelodeon, MTV, and Comedy Central are among the networks owned by Paramount Global.
Both companies operate low-volume, loss-making streaming services. Paramount+ (and Showtime) are owned by Paramount Global, whereas Peacock is owned by NBCUniversal.
However, NBCUniversal is unlikely to merge with Paramount Global. Because both firms possess broadcast networks, that agreement is unlikely to go through.