What a difference a year makes. It wasn’t all that long ago that the industry thought of Warner Bros. Discovery as a company on the outs. Its debt load after the merger of Discovery and Warner Media was gigantic, its streaming platform HBO Max was wildly unprofitable, and its CEO David Zaslav went around slashing budgets and mothballing content like a mass media reaper.

• Speculation is building that WBD could be acquisition-minded thanks to improvements on its balance sheet.
• One potential target could be Paramount Global, whose valuation is slumping and which could be available at the right price.
• WBD saw its streamer Max generate a $111 million profit in its most recent quarter.

Is WBD Looking to Make a Splashy Buy?

The company has managed to turn its finances and its reputation around in the past year. The era of drastic content cuts is over, and now WBD’s financials are rosy indeed, at least from its streaming segment. It lost 700,000 streaming subscribers during the most recent quarter, but its average revenue-per-user (ARPU) is up, and it turned in a profit of $111 million at a time when most streamers are feeling fortunate to simply reduce their losses.

A report from CNBC indicates that signs are pointing toward WBD becoming merger-minded in the next few years. Board member John Malone says that regulatory issues could ease for big media companies in the coming years, as some companies will become too distressed to continue on by themselves.

“I think we’re going to see very serious distress in our industry,” Malone said. “There is an exemption to the antitrust laws on a failing business. At some point of distress, right, then some of the restrictions, they look the other way.”

Paramount Global is a logical target because of its dwindling market valuation, and because WBD does not own a broadcast network already. Paramount owns CBS, but it would be far easier to convince regulators to let the deal go through than it would if a company like Comcast or Disney, which also own broadcast networks in NBC and ABC respectively were to try to acquire Paramount.

Is Paramount For Sale?

A recent report indicates that Paramount Global’s controlling shareholder Shari Redstone has been willing to make a deal for the company at the right price for years. Finding a buyer with Paramount’s value plummeting and every media company with a streaming service finding itself in dire financial straits last year has been a tall order.

That’s why Paramount has been exploring selling off non-core assets in the last year. It tried to find a buyer for BET and its sibling streamer BET+ this summer, but backed off that sale attempt when it couldn’t get the type of offer it wanted. It also got a $3 billion offer for Showtime, but decided to keep that part of its company to integrate with its streamer Paramount+.

“Warner Bros. now is making money. Not a lot, but they’re making money,” Malone said. “Peacock is losing a lot of money. Paramount is losing a ton of money that they can’t afford. At least [Comcast CEO] Brian [Roberts] can afford to lose the money.”

Comcast, as referenced, is at least able to fall back on its internet business as a way to keep generating free cash flow while it tries to make Peacock profitable and weather losses from its linear channels. But Paramount has no such broadband business, and its streaming services aren’t on as rapid a path to profitability as many of its competitors.

The acquisition attempt may wait until after the 2024 U.S. presidential election, but observers can count on WBD making inquiries before then. The company’s financials have it primed to make some serious pursuits of major assets, and Paramount Global could be squarely in its sights.