On Wednesday, 20 December, Axios reported that the CEOs of Warner Bros and Paramount Studios met for lunch to discuss a potential merger of the powerhouses. Axios noted that CBS and CNN – among other cable assets – joined the discussion at Paramount’s global headquarters in New York City’s Times Square.
Warner Bros. Discovery and Paramount discuss potential merger in 2024
In April 2022, WarnerMedia completed its $43bn merger with Discovery, securing better tax advantages and creative licensing. As a result, Warner Bros CEO David Zaslav will face heavy tax implications if he chooses to engage in any merger before April 2024 (two years after the original merger).
While a potential merger between the two studios could once again upend the media industry, the talks aren’t a complete surprise. Zaslav, who executed acquisitions at Discovery, has talked in recent months about going shopping for additional assets to boost Warner Bros. Discovery’s content offerings.
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After the talks were announced, Warner Bros. Discovery (WBD) stock plummeted to end the day at 5.7%. The stock landed another blow, falling a further 1.4% in after-hours trading, and Paramount’s stock fell 1% in after-hours trading. Investor sentiment suggests that the merging of old-time media giants will continue throughout the coming decade as companies try to stay afloat in an increasingly online media world.
Rich Greenfield, co-founder and analyst at LightShed Partners, told CNN:
I think it speaks to the panic. The industry is in for a very challenging future. They’re going to try to get bigger to compete in streaming.
Both Paramount and Warner Bros. Discovery are in debt; however, the latter has impressed Wall Street by cutting its debt down to $45.1bn from $49.3bn in Q1. WBD’s stock is up 23% this year, with Disney up 5% and Paramount down 8%.
