Warner Bros. Discovery and Paramount Global are currently engaged in preliminary merger discussions, according to sources.
Sources indicated that Warner Bros. Discovery CEO David Zaslav and Paramount CEO Bob Bakish met on Tuesday to go into the potential terms of a merger.
These talks are in the early stages, and it is uncertain whether they will result in a final agreement. Both companies declined to provide comments.
This development comes amid growing speculation about Paramount’s future. Shari Redstone, the controlling shareholder of Paramount through her company National Amusements, is reportedly keen on pursuing a deal.
Recently, Redstone also engaged in discussions with David Ellison’s Skydance, which is supported by Gerry Cardinale’s investment firm RedBird, according to sources.
Paramount, which owns the Paramount movie studio and the CBS broadcast network, is also dealing with a significant debt burden.
On the other hand, Warner Bros. Discovery, formed through the merger of Warner Media and Discovery, has been focusing on cost reduction and debt management under Zaslav’s leadership.
The company has reported profitability in its streaming division, while other streaming services, apart from the leading Netflix, are working to address financial losses.
Last month, Zaslav and Liberty Media’s John Malone, a Warner Bros. Discovery shareholder and board member, suggested that the company might be positioning itself to pursue acquisition opportunities in the next year or two.
he media industry is widely seen as being ripe for consolidation, though there are concerns that the Biden administration might oppose major media mergers.
Warner Bros. Discovery is nearing the two-year mark since its 2022 merger, a significant milestone for Reverse Morris Trust tax purposes, allowing it to pursue another major deal two years after the previous merger.
Additionally, there is industry speculation that Warner Bros. Discovery might enter merger discussions with Comcast’s NBCUniversal.
Following the news, Warner Bros. Discovery’s stock fell more than 5% on Wednesday, while Paramount’s shares showed a slight rebound from their lows.
