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Warner Bros. Discovery in rumored merger talks with Paramount

By Nithya Bose in US business news, posted December 22, 2023

Warner Bros. Discovery rumored to be in talks over a potential merger with Paramount, according to sources.

The CEO of Warner Bros. Discovery, David Zaslav, conveyed the company's interest in merging during a recent meeting with Paramount's CEO, Bob Bakish.

The news of the potential deal led to fluctuations in the stock prices of both companies, with Warner Bros. Discovery experiencing a decline upon the announcement.

Shari Redstone, who controls Paramount through her stake in National Amusements, has signaled a willingness to consider options for her family's media empire.

Previous talks explored selling the controlling stake to Skydance, a studio associated with Paramount franchises such as "Top Gun" and "Mission: Impossible."

A merger between Warner Bros. Discovery and Paramount would create a number of strategic advantages, particularly in negotiations with cable distributors like Comcast and Charter.

Paramount's bundle of TV networks, including MTV, Nickelodeon, and Comedy Central, could also enhance Warner Bros. Discovery's bargaining power.

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Potential synergies extend to cost savings in the production and marketing of shows and movies, given the shared resources of their respective networks and movie studios.

Paramount's CBS broadcast network could also offer Warner Bros. Discovery another platform for airing National Basketball Association (NBA) games, a hugely valuable asset in negotiations for rights renewal.

However, there are some major obstacles to overcome.

One of these is the financial burden on Warner Bros. Discovery.

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The firm still carries over $40 billion in debt despite efforts to reduce leverage following the 2021 merger with AT&T's WarnerMedia.

The deal's feasibility before the second anniversary of the merger completion in April remains uncertain due to complex tax laws.

If a Paramount deal materializes, it could trigger further consolidation within the media industry.

Companies seek strategic alliances to navigate the evolving landscape as traditional TV businesses face challenges with cord-cutting and declining pay TV.

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