Let’s say you might have a crush on two individuals and you discover out considered one of 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 in the present day. 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, based on individuals acquainted with the matter.
“Crush” may really be too robust right here. This is just not a case of each corporations lusting for one another. It’s extra of a partnership of necessity. Both corporations 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 steadiness sheets. They simply need to survive and increase their share value.
But perhaps Warner Bros. Discovery would reasonably 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 come back collectively. This yr, they’re the highest two U.S. film studios by income. While smaller than Warner Bros. or Universal, Paramount continues to be a high 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 will probably be vital right here. If Comcast spins out NBCUniversal to merge with Warner Bros. Discovery, it may theoretically give Zaslav debt-free earnings to strengthen the mixed firm’s steadiness sheet.
Bob Bakish, president and chief govt officer of Viacom, attends the fourth day of the annual Allen & Company Sun Valley Conference, July 11, 2023 in Sun Valley, Idaho.Â
David A. Grogan | CNBC
That is likely to be extra engaging than taking over Paramount Global’s $15 billion of debt. Warner Bros. Discovery has almost $45 billion of debt and has labored to convey down its leverage all yr by boosting free money move. Buying Paramount Global is likely to be seen as beginning over for Zaslav, who hasn’t made many mates in Hollywood with his intensive reducing of each jobs and content material spending.
It’s additionally attainable Comcast CEO Brian Roberts needs to carry on to NBCUniversal and is not concerned about doubling down on legacy media proper now. NBCUniversal is not in merger talks with anybody proper now, based on 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 related belongings to Paramount Global. They each have broadcast networks: NBC for NBCUniversal and CBS for Paramount Global. They each personal a slew of growing old cable networks. NBCUniversal’s embrace Bravo, E! and USA. Paramount Global’s embrace Nickelodeon, MTV and Comedy Central. Both corporations have subscale, money-losing streaming companies. Paramount Global owns Paramount+ (and Showtime), and NBCUniversal has Peacock.
NBCUniversal in all probability is not a merger match with Paramount Global, although. Both corporations’ possession of broadcast networks probably 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 associate? Would that lead Redstone to promoting her stake in National Amusements and letting another person, like David Ellison at Skydance, determine out the long run for Paramount Global?
Those discussions have now begun. They will nearly definitely warmth up within the coming weeks and months. The beginning gun has been fired. Welcome to 2024.
Disclosure: Comcast is the mother or father firm of NBCUniversal, which owns CNBC.