Warner Bros. Discovery Should Be Calling Paramount Every Day About Buying CBS
Acquiring CBS would give WBD a massive infusion of new sports rights, and would be fairly easy to stomach for U.S. regulators.
Is anyone going to end up buying Paramount Global? The odds are increasing tilting toward no, as the company has broken off merger talks with Skydance Media this week. Those discussions were further along than any other potential deal for Paramount, and while a major transaction involving the entire company is still possible, the chances are better that any future deal involving the legacy media firm will include a divestiture of some of its assets. Paramount could also decide to go it alone, but it finds itself in a precarious position financially, and if it decided to sell off its broadcast channel CBS as a way to save money in the future, Warner Bros. Discovery should be doing whatever it can to get its hands on the network.
Key Details
- WBD engaged with Paramount regarding a transaction in December, but talks came to nothing in the end.
- Buying CBS would give WBD a huge infusion of new sports rights, including one of the NFL’s main packages.
- Regulators would be less likely to quash the deal, as WBD does not currently own a broadcast channel.
WBD cannot miss a chance to pursue CBS if there’s any possibility the channel can be had. Even with a debt load that’s still near $40 billion, the opportunity to pick up CBS and all the rights that come along with it is too good for WBD executives to ignore. WBD engaged with Paramount last December about potentially buying the company, but the discussions fell apart quickly.
To start with, buying CBS would bring WBD a huge swath of college and pro sports. CBS’s Sunday afternoon NFL package is the crown jewel of the collection; if WBD got that, not only would it reap all the ratings and revenue generated by the most popular sport in the United States, it would be able to send those games to the Venu Sports joint venture service it’s creating with Disney and Fox. That would mean that both Sunday afternoon NFL packages would be united on Venu, greatly enhancing the value of the service.
That’s before even getting into the annual NCAA Men’s Basketball Tournament, AKA March Madness. TNT, TBS and truTV currently split the rights to the tournament with CBS, but buying the channel would give WBD exclusive rights to March Madness, another of the year’s most popular TV events in terms of ratings. CBS also has a big package of college football games from the SEC, and guess which company recently entered into a sublicensing agreement to air a package of College Football Playoff games? That’s right, WBD.
Would Regulators Put the Kibosh on a CBS-to-WBD Transaction?
Buying CBS would also give WBD something it doesn’t currently have in its vast arsenal of TV channels: an over-the-air broadcast network. That will be important to federal regulators, as U.S. law prevents any one company from owning TV stations which reach more than 39% of total U.S. households. That limits the number of outlets that could buy CBS outright, but because WBD doesn’t own any broadcast channel affiliates as of now, it likely won’t have much trouble getting the deal approved.
Having a broadcast channel would give WBD a way to offer more live news content, as well. The company already owns CNN, but it would expand the reach of its news programming to every household with a pay-TV subscription or over-the-air antenna in the United States.
Buying CBS would also offer big opportunities for WBD to improve its streaming service Max. The company could decide to put a livestream of all local CBS affiliates on Max the way Paramount+ with SHOWTIME currently does, or it could be more selective with the programming it houses on its streamer. Depending on what intellectual property came along in the sale, Max could gain the rights to stream hugely popular shows like “NCIS,” which would help it boost engagement on Max while viewers waited for new seasons of HBO prestige TV shows to arrive.
Getting its hands on all of the sports mentioned above would give Max ample reason to begin charging extra for the Bleacher Report Sports add-on, which has always been the plan. WBD launched the B/R add-on to give viewers of Max a way to watch live sports from TNT, TBS and truTV without a cable subscription, and originally intended to charge $9.99 per month extra for the privilege. But months have gone by since the initial rollout, and while customers certainly won’t complain that the B/R sports hub is still free on Max, the company likely sees it as a potential revenue generator that’s currently going to waste.
The reasons for a pursuit of CBS by Max seem highly compelling to me, though there’s no knowing what kind of capital would be required to get the channel unless WBD were to start actually making some calls. As far as I’m concerned they should be doing just that, and they should keep calling until they get a positive answer about acquiring the channel from Paramount.
Max
Max is a subscription video streaming service that gives access to the full HBO library, along with exclusive Max Originals. There are hubs for content from TLC, HGTV, Food Network, Discovery, TCM, Cartoon Network, Travel Channel, ID, and more. Watch hit series like “The Last of Us,” “House of the Dragon,” “Succession,” “Curb Your Enthusiasm,” and more. Thanks to the B/R Sports add-on, users can watch NBA, MLB, NHL, March Madness, and NASCAR events.