Warner Bros. Discovery & Paramount chiefs Zaslav & Bakish in ‘preliminary merger’ talks

Star Trek: Discovery

Warner Bros. Discovery CEO David Zaslav and Paramount chief Bob Bakish have met up in New York City to discuss a potential merger, according to US reports.

Rumours surrounding a potential tie-up between the two US studios have been circling for months, with Paramount Global’s majority owner National Amusements reportedly listening to offers for its assets.

Now it has emerged that Bakish and Zaslav met earlier this week “to discuss a possible merger”, according to Axios, which broke the news.

David Zaslav (Source: Warner Bros. Discovery)

The WBD chief also talked to Shari Redstone, CEO of Paramount Global’s majority owner National Amusements, with discussions revolving around the potential future of Paramount’s broadcast operation CBS.

Axios said that while talks remain at an “early” stage, WBD had hired bankers to explore a deal although it is understood that any tie-up could not take place before April because of tax issues around Discovery’s merger with Warner Bros.

The news comes just a week after reports claimed that Paramount owner National Amusements had explored a sale of its stake in the studio to US group Skydance and investment firm RedBird Capital Partners. That news sent Paramount shares surging 14%.

News of the WBD talks also emerged shortly before a Bloomberg report claimed that Paramount is revisiting its plan to offload BET Media Group.

That strategy had been shelved despite offers from US media tycoons Tyler Perry and Byron Allen, with the bids deemed to be too low.

Assets & advantages

Combining WBD and Paramount would create a giant US operator that would bring streamers Discovery+, Max and Paramount+ under one roof.

They would sit alongside hundreds of thousands of hours of programming, ranging from Top Gun, Star Trek: Discovery and Yellowstone to House Of The Dragon, Mythbusters and Deadliest Catch.

Bob Bakish (Source: MIPCOM

Both companies have huge US studio operations as well as considerably sized international divisions, including sales arms Warner Bros. Discovery International Television Distribution and Paramount Global Content Distribution.

Paramount is also owner of CBS in the US, but WBD’s global reach is considered greater, with Max being rolled out widely with numerous channels still in operation around the world.

And while the potential deal has been couched in terms of a ‘merger’, WBD’s market cap is almost $30bn while Paramount is valued at $10bn.

WBD has been slashing debt since its creation two years ago, with savings of around $5bn, meaning it is now freer to pursue a deal, although it is still saddled with around $45bn in total.

Paramount, as the smaller player, has been widely seen as needing a buyer, however, it has a more imminent debt pile of more than $15bn to contend with.

The report had little effect on either company’s share prices, with WBD down 5% at $11.66 in after market trading and Paramount standing at $15.50.

WBD’s share price is up almost 30% over the past 12 months largely because of the reduction in its debt pile, but it still remains at less than half of its value when the company launched in 2022. Paramount is down around 8% over the past 12 months.