Let’s say you will have a crush on two individuals and you discover out one in all them may such as you again. Do you simply begin relationship that particular person, or do you discover out what the opposite particular person thinks, too?
That’s the place Warner Bros. Discovery finds itself as we speak. The firm has held preliminary merger talks with Paramount Global, the media conglomerate managed by Shari Redstone. Warner Bros. Discovery Chief Executive David Zaslav met with Paramount Global CEO Bob Bakish on Tuesday to debate what a merger of the businesses may seem like, in accordance with individuals acquainted with the matter.
“Crush” may really be too robust right here. This isn’t a case of each firms lusting for one another. It’s extra of a partnership of necessity. Both firms haven’t got a transparent future competing for content material in a streaming-dominated world the place Apple, Amazon, Netflix and YouTube proprietor Google have far bigger stability sheets. They simply need to survive and enhance their share worth.
But possibly Warner Bros. Discovery would moderately merge with Comcast‘s NBCUniversal — if Comcast is open to it. There may be regulatory issues with NBCUniversal. It’s unclear whether or not officers would enable Universal and Warner Bros. to return collectively. This 12 months, they’re the highest two U.S. film studios by income. While smaller than Warner Bros. or Universal, Paramount continues to be a prime 5 studio most years.
Comcast additionally owns cable information channel MSNBC, which may or may not be an issue for regulators on condition that Warner Bros. Discovery owns CNN.
Deal construction might be vital right here. If Comcast spins out NBCUniversal to merge with Warner Bros. Discovery, it might theoretically give Zaslav debt-free earnings to strengthen the mixed firm’s stability sheet.
Bob Bakish, president and chief government officer of Viacom, attends the fourth day of the annual Allen & Company Sun Valley Conference, July 11, 2023 in Sun Valley, Idaho.
David A. Grogan | CNBC
That is perhaps extra engaging than taking up Paramount Global’s $15 billion of debt. Warner Bros. Discovery has practically $45 billion of debt and has labored to convey down its leverage all 12 months by boosting free money move. Buying Paramount Global is perhaps considered as beginning over for Zaslav, who hasn’t made many buddies in Hollywood with his intensive chopping of each jobs and content material spending.
It’s additionally doable Comcast CEO Brian Roberts needs to carry on to NBCUniversal and is not eager about doubling down on legacy media proper now. NBCUniversal is not in merger talks with anybody proper now, in accordance with an individual acquainted with the matter. Spokespeople for Comcast, Warner Bros. Discovery and Paramount Global all declined to remark.
Generally talking, Comcast’s NBCUniversal has comparable property to Paramount Global. They each have broadcast networks: NBC for NBCUniversal and CBS for Paramount Global. They each personal a slew of ageing cable networks. NBCUniversal’s embrace Bravo, E! and USA. Paramount Global’s embrace Nickelodeon, MTV and Comedy Central. Both firms have subscale, money-losing streaming companies. Paramount Global owns Paramount+ (and Showtime), and NBCUniversal has Peacock.
NBCUniversal most likely is not a merger match with Paramount Global, although. Both firms’ possession of broadcast networks doubtless makes that deal a non-starter.
Opening discussions with Paramount Global ought to give Warner Bros. Discovery a learn on the place Comcast stands on dealmaking. Is Comcast OK with Paramount Global and Warner Bros. Discovery merging? Or does Roberts need to mix with Warner Bros. Discovery as a substitute, leaving Paramount Global with out an apparent dance accomplice? Would that lead Redstone to promoting her stake in National Amusements and letting another person, like David Ellison at Skydance, determine out the longer term for Paramount Global?
Those discussions have now begun. They will nearly actually warmth up within the coming weeks and months. The beginning gun has been fired. Welcome to 2024.
Disclosure: Comcast is the mum or dad firm of NBCUniversal, which owns CNBC.