NBCUniversal Buying Warner Bros Discovery? Breaking Down a Potential Merger and Why It May Not Happen

Will NBCUniversal merge with Warner Bros. Discovery? Here is some evidence about why it may happen, and also arguments why it may not.

As the perfect example of an average reader of The Illuminerdi, how many Hollywood studios do you think you could name off the top of your head? Probably a few, right? From Warner Bros. to NBCUniversal to Disney, and even smaller houses like A24 and Lionsgate. Here’s a follow-up question. How many Hollywood studio CEOs can you name? Probably Bob Iger at Disney, and likely his successor/predecessor Bob Chapek.

Maybe recent reports about the strikes may have brought to your attention names like Donna Langley from Universal Pictures or Ted Sarandos from Netflix, but in 2022, there was a big name that was suddenly on everyone’s radar: Warner Bros. Discovery post-merger CEO David Zaslav, social media’s favorite enemy.

David Zaslav’s Reign at Warner Bros. Discovery

Zaslav took over the combined company of Warner Bros. and Discovery in the first half of 2022 and quickly started making changes. Some of them you may know: He was very insistent on restructuring DC to find a Kevin Feige-like figurehead, eventually landing on James Gunn and Peter Safran, who currently lord over DC Studios. That happened after he threw Batgirl and the sequel to 2020’s animated Scoob! in the trash, a move that put him on everyone’s radar back in early August of that year.

You may also be familiar with the merger of HBO Max and Discovery Plus, which birthed Max earlier in 2023. He’s also made some behind-the-scenes changes at the studio trying to reduce Warners’ huge debt load, from cutting costs left and right to prioritizing the studio’s revenue as a sign of a healthy in-house economy rather than the share price. (His performance bonus is attached to free cash flow, i.e., money that they get back minus the money they spend, rather than the stock market, which means that in a strike year like 2023 where production has been halted for months, he will get a big fat check.)

In 2022 after he took over he started to reshape the entire company from the ground up. He wanted to get things in order over at DC, he wanted his hands all over CNN (the company’s news channel, which pivoted from an anti-Trump position during 2016-2021 to a more centrist view after former head Jeff Zucker, who brought the biggest profits in the history of the channel during his tenure, was replaced by Chris Licht — a Zaslav guy who has now been ousted in favor of Mark Thompson, former CEO of The New York Times).

Zaslav also doubled down on streaming, elevating Casey Bloys (head of HBO) to Lord of All Things Streaming at WBD, and has been insisting on reviving their biggest franchises — namely, Harry Potter and The Lord of the Rings, with new plans for both of them officially announced during 2023.

“We are building Warner Bros. Discovery for the long term,” a WBD spokesperson told The Hollywood Reporter in a story about the studio’s frenzied changes, back in September 2022 (a month and a half before the announcement of the creation of DC Studios). Those changes were intended for the reduction of the 50B+ debt the studio had accumulated, and for getting Warner Bros. back on its feet under a tumultuous tenure under AT&T.

But is that all that Zaslav wanted? That THR story was one of the first to speculate on a possibility beyond that: Maybe he’s just putting the house in order and making it look pretty for a potential buyer to come in and take over the whole thing. The candidate? Obviously, private equity funds are to be considered here, but the truth is that the right answer seems to be Comcast and its Hollywood division, NBCUniversal.

The Prospects of an NBCUniversal-WBD Merger

This is not strictly new, it’s been a topic of conversation among people in the media for over a year, but the inclusion of this possibility in a recent story by Variety on the disastrous production of Aquaman and the Lost Kingdom raised all the alarms of the geeky side of the Internet. The obvious question being: Will Dom Toretto be a part of the next Justice League team? (One can dream!) A few notes here.

Comcast isn’t just interested in unloading dozens of billions of dollars to acquire the DC brand. Buying WBD is a massive undertaking and they have much bigger ambitions than building their own version of James Gunn’s DCU. Discovery and its investments in reality TV are a huge and profitable business. Comcast has a lot of money invested in cable and news, which is part of the reason why Peacock will never truly take off.

Taking over CNN, especially as a channel with slightly different political views than NBCUniversal, so that they can attract a larger spectrum of viewers and consumers, is appealing. Comcast also has a lot of money invested in parks, which they can exploit through Zaslav’s luxurious-looking franchises.

Also, NBCUniversal’s Peacock service has shown an inability to truly captivate the consumer base could be compensated by taking over a significant chunk of the streaming business in Max — moreover, Max has just started its own venture in sports, which is also a highly valuable asset that Comcast should be interested in investing in before deep-pocketed streamers like YouTube or Apple take it.

NBCUniversal parent company Comcast already tried a similar integration of a legacy media company in 20th Century Fox, back in 2018 before it was outbid by Disney — a move that seems more and more questionable every day, until Avatar 5 makes $4 billion globally, of course. So they are in the game of acquiring (unlike Apple, by the way, which is so not buying Disney in this writer’s opinion, no matter what anyone says), and David Zaslav may be open to a sell. But here’s where it gets tricky and plenty of reasons appear for the acquisition not to occur.

Why NBCUniversal-WBD May Not Happen

First of all, because of the complicated legal terms to come out of the merger between Discovery and Warner Media, no negotiations to buy or merge with Warner Bros. Discovery can take place before April 2024. But we also get into monopoly concerns, which the current White House administration has a hardline policy on. If Biden is sitting in the Oval, he will never allow a merged company owning both Warner Bros. and NBCUniversal, and for similar reasons, a single company controlling two of the few news channels seems very questionable as well — although CNN’s centrist pivot may act in its favor here.

There’s also the relationship between Brian Roberts and David Zaslav. As reported by Puck News earlier this year, the two just don’t really see eye to eye. Zaslav is new to Hollywood and he has a lot to learn — this is something that was already mentioned in the aforelinked THR story from a year ago, but was mostly evident when reading through the reports on the WGA strike negotiations, where Zaslav was the quiet guy in the room, letting the experienced people like Donna Langley and Bob Iger take over.

Having him as the head of a merged NBCUniversal-WBD seems like a non-starter for Roberts, and why would Zaslav want to merge if he’s not guaranteed to take over the spoils? That’s where the money issue comes in.

The potential dollar figure is impossible to guess correctly for us, but looking at the economics of both companies and past deals, the floor for buying WBD these days would be $30 billion (its equity value was $31 billion, per Puck), and that’s really low. A more realistic scenario would probably be in the $50 billion ballpark, which is where the Disney-Fox negotiations started, with the top ceiling for Comcast, the parent company of NBCUniversal, being WBD’s equity value plus its net debt: around $80 billion, more expensive than Fox for Disney.

However, the Fox assets have turned out to be a bit of a bad investment for now. Its library on Disney Plus seems to matter very little, and outside of Avatar, they aren’t really producing any hits. Sure, they may have prestige divisions like Searchlight representing them at the Oscars, but that’s not exactly a money-making business, at least not in the short term, which is what Disney is all about these days. (They have longer-range implications, like their relationships with talent in which they invest dozens of millions on Oscar campaigns, and later they can call back to lead their latest franchise.)

But what do you think? Too much corporate talk for one day? Is there any chance this NBCUniversal and Warner Bros. Discovery merger will go through? Will the Minions of NBCUniversal be a part of the new Harry Potter Max series? Let us know your thoughts on our social media!

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