Warner Bros. Paramount Merger Talks Take Definitive Turn

By Jason Collins | Published

Warner Bros. Discovery and Paramount Global merger talks took a definitive turn, with Warner Bros. no longer considering merging its service with Paramount+—which would have put both streaming services under one corporate umbrella. However, those talks are now over, and Paramount is now considering selling to Skydance Media.

Warner Bros. And Paramount Deal Fell Apart

According to people familiar with the matter, Warner Bros. quit on its potential merger of Paramount Global. The company has gone “pencils down,” thus putting a stop to the merger talks after months of negotiations. The news regarding this merger dropped last December, suggesting that the two companies are considering a potential merger. Company heads have met in person for hours-long meetings ironing out the creases in the merger deal, but it would seem that the media giants have “cooled off” about the proposed Warner Bros. Paramount merger.

A Potential Mega Merger

Admittedly, when the news of the potential merger dropped, those intimate with the financials of the entertainment industry were worried about the regulatory hurdles the companies would face if they tried to become one. Remember the media coverage over Microsoft’s acquisition of Activision Blizzard King? As it turns out, this would be a major merger, as the combined subscriber count of both companies would be second only to Netflix, so naturally, a Warner Bros. Paramount merger would raise some concerns.  

Streaming Profits Altered The Deal

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One of the concerns associated with the Warner Bros. Paramount merger was the consolidation of debt. Paramount Global is currently $14.6 billion in debt, as per their latest earnings report, and Warner Bros. Discovery was $40 million in debt at the time of the merger, but the company’s streaming business just turned profitable, making $103 million off its 97.7 million subscribers for the year 2023. These numbers put WBD in front of both Disney and Paramount in terms of streamer earnings and provide some insight into why WBD opted out of the Warner Bros. Paramount merger deal.

Struggling Franchises

The merger between Warner Bros. and Paramount would add another company with struggling legacy media assets to Warner Bros’ portfolio, including buying Paramount+, a streaming service that is yet to make a profit. However, the chances of that happening are infinitesimally small, considering that Paramount+ lost $1.66 billion in 2023. In all honestly, Warner Bros. might’ve dodged a bullet by dropping the merger talks.

Potential New Partners For Each

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On the other hand, Paramount Global is still pretty determined to sell or merge and has formed a committee and hired financial advisors whose sole focus is to analyze potential bids for all or parts of the company. With Warner Bros. out of the picture, Skydance Media, the movie and TC studio run by David Ellison, is still performing its due diligence on a potential merger with Paramount. Comcast already stated that it isn’t interested in acquiring Paramount, but the company has been mulling over a potential commercial partnership with Paramount Global.

What’s Next For Warner Bros.?

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That could potentially include bundling or merging Peacock and Paramount+, but it’s still unknown whether Paramount Global has any interest in merging with Peacock, considering that it was exploring a sale scenario with Warner Bros. However, with the Warner Bros. Paramount merger out the window, those scenarios are no longer actionable.

Source: CNBC