Report: Warner Bros. Discovery, Paramount in Early Merger Talks
The Facts
Warner Bros. Discovery and Paramount are reportedly in talks over a potential merger. According to Axios, CEOs David Zaslav of Warner and Bob Bakish of Paramount discussed merging the combined $38B market value of their companies during lunch in New York this week.
Zaslav reportedly also spoke with Shari Redstone, the head of Paramount's parent company, National Amusements, but it's unknown whether Warner would buy either if a merger took place. The two CEOs are believed to have discussed how they could work together to compete with industry giants like Netflix and Disney+.
The Spin
Narrative A
The entertainment industry is unashamedly pursuing merger after merger, even despite the recent Hollywood writers' strike and the Biden administration's legal battles. As the government fails to block both horizontal and vertical mergers, the industry has become more emboldened to narrow the TV and movie playing field. After the strike, everyone predicted such moves would occur — Warner Bros. and Paramount are proving that true.
Narrative B
From a consumer and anti-trust standpoint, this merger may actually be a good thing. While the government will certainly be watching these talks play out, it's important to note that Netflix and Disney+ are both much bigger than Paramount+ and Max — if they were to merge, there would be a more suitable competitor thrown into the mix. The combined debt of Warner Bros. and Paramount would also be an issue, but more subscriptions from their respective sports streaming assets could also bring in more cash.
