Zaslav’s success shedding debt is one of the primary reasons WBD’s stock is up 23% this year. Discovery has been cutting costs and impressing Wall Street with its ability to unload its debt burden – but it still held a stunning $45.1 billion at the end of the third quarter, down from $49.3 billion at the start of 2023. The companies are also both saddled with enormous amounts of debt. Those services won’t get any cheaper after studios reached expensive new contracts with writers and actors over the past few months. The advertising market is shifting to streaming, which has helped boost subscriptions and stem losses – but both companies are still shedding huge sums of money on their Paramount+ and Max services as content costs rise. Linear television ratings are in decline as cable customers increasingly cut the cord. 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.īoth companies face significant challenges in a rapidly shifting media environment. They’re going to try to get bigger to compete in streaming.”īut any tie up between the media giants could also run into regulatory hurdles. “The industry is in for a very challenging future. “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 move to rapidly consolidate across the media industry comes as the once-formidable studios recalibrate their revenue strategies to compete against Netflix in the streaming era. Paramount’s stock rose initially on the report but was a little less than 1% lower after hours. It fell another 1.4% in after-hours trading. Discovery’s ( WBD) stock fell immediately after Axios published its report and ended the day down 5.7%. Investors weren’t happy, though: Warner Bros. Shari Redstone, the family heiress of Paramount’s parent company, National Amusements, has reportedly been in talks to sell her stake in the company.Ī person familiar with the matter confirmed that Zaslav has spoken to Redstone about a possible deal.Īnalysts expect consolidation in the media business to continue as legacy entertainment companies bulk up in their efforts to compete with tech titans in Silicon Valley, which are increasingly wading into the content space. Meanwhile, Paramount is in need of a strategic partner to survive in the current media landscape. Zaslav, who executed a number of acquisitions at Discovery, has talked in recent months about going shopping for additional assets to boost Warner Bros. While a potential merger between the two studios could once again upend the media industry, the talks aren’t a complete surprise. Discovery elect to engage in a merger ahead of the April date, it will face major tax implications. The date, which marks the two-year anniversary of WarnerMedia’s $43 billion merger with Discovery, was agreed upon during the deal to secure tax advantages - and should Warner Bros. Discovery cannot for the time being enter into a transaction with Paramount, or any other entity, until an arcane tax statute prohibiting Zaslav from additional acquisitions or mergers ends in April 2024. Discovery and Paramount declined to comment. The discussion over lunch, which was first reported by Axios, took place at Paramount’s global headquarters in New York City’s Times Square. and Paramount studios as well as CBS, CNN, and other cable television assets. Discovery Chief Executive David Zaslav met on Tuesday with Paramount Global Chief Executive Bob Bakish, and they broached a potential merger between the two companies, two people familiar with the matter told CNN.Ī potential merger of the two media giants would create an entertainment and news juggernaut, encompassing Warner Bros.
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