Breaking: Warner Bros. Discovery, Paramount Global Discussing Merger

The rumors of a potential sale of Paramount Global have been out there for months, but their frequency and intensity have increased dramatically in recent weeks, and on Wednesday, Axios reported that there is actual fire to go along with the smoke that we’ve seen this fall. According to the business news outlet, Paramount is in the early stages of discussing a potential merger with Warner Bros. Discovery. speculation about this deal came to the forefront of industry conversations last month, and now reports indicate that CEOs Bob Bakish (Paramount) and David Zaslav (WBD) met on Tuesday to sketch out what an early deal could look like.

• The discussions are in the very early stages and might never amount to anything, but Paramount’s chief investor is looking for a deal to be made.
• Sports would be the central component of the deal, merging CBS’s NFL and college football and basketball rights with WBD’s NBA, NHL, and MLB.
• CEOs Bob Bakish and David Zaslav reportedly are in the early stages of constructing an agreement.

As a company, Warner Bros. Discovery is less than two years old. The company was formed when Discovery acquired WarnerMedia in April 2022. Since then, Zaslav has looked to cut spending and trim budgets to get the bloated, prestige side of the company to run more like the bare-bones lifestyle side which he came from. Despite ruffling many feathers along the way, Zaslav has succeeded in turning the company’s financials around, even making its streaming sector profitable for the first time.

Because of those financial changes, WBD has become a potential buyer once the regulatory waiting period expires following last year’s deal. Paramount’s controlling investor Shari Redstone has been open about her willingness to make a deal for the company, and as the studio’s debt continues to pile up, it looks like now might be the time that something comes together. There has been speculation recently that Paramount might not be able to afford its next payment to the NFL for its broadcast rights. Paramount’s Wall Street value has taken a nosedive over the past year, making it ripe for another media company to swoop in and grab it for a “reasonable” price.

Once WBD clears the two-year, post-merger window from its last deal, the company will be able to pursue other acquisition options. There had previously been conjecture that after the company had cleared the waiting period, it could actually be purchased by Comcast. Many believed that Zaslav’s efforts to cut the balance sheet were designed to make the newly assembled company more attractive to potential buyers. However, it now appears to be the other way around.

If WBD and Paramount did eventually merge, it would create a sports rights package that rivals that of the self-proclaimed worldwide leader in sports, ESPN. WBD currently holds domestic broadcast rights for MLB, NBA, NHL, United States Men’s and Women’s Soccer, NASCAR, and more. Paramount has the NFL, college football, golf, international soccer, and more. Both companies have men’s basketball rights, as they share the NCAA Men’s Basketball Tournament. In a day and age where live sports seem to be not only the one thing keeping people connected to linear TV, but also the future of streaming services, a move like this could solidify a future Paramount-WBD company.

Warner Bros. Discovery’s flagship streaming service Max launched a sports-specific tier called the Bleacher Reports Sports Add-On earlier this fall. It is currently free to all Max subscribers, but it will become a $9.99 per month add-on ahead of March Madness this coming spring.

Zaslav has been open in the past about not wanting to overspend for sports rights, even going as far as to say, “We don’t have to have the NBA, and if we do a deal on the NBA, it’s going to look a lot different,” just over one year ago. However, with the introduction of the B/R Sports Add-On, it is clear that WBD recognizes how valuable live sports are to the present and future of broadcasting. So, if the company can find a way to get in on existing rights mid-deal, without having to outbid competitors, it might just be worth it.

A potential deal with WBD isn’t the only M&A discussion that Paramount is apparently in. On Wednesday, it was reported that the company is back to looking for someone to purchase the BET brand. Billionaire media magnate Byron Allen is once again the leading candidate, with a target price of $2 billion currently on the table.

The one thing to consider in any merger or acquisition discussion is that the Biden administration has been very cautious when it comes to deals that could border on monopolistic, especially when it comes to major media outlets.