CEOs of Warner Bros. Discovery (David Zaslav) and Paramount Global (Bob Bakish) met in New York on Tuesday for several hours to discuss a possible merger between both companies, Axios reports. The news came out a day after we at The Illuminerdi published an article breaking down possible avenues for Paramount Global to be sold next year, a scenario that is looking more and more likely every day.
The company is run by Bob Bakish but is controlled by Shari Redstone via National Amusements Inc. (NAI), which only has a 10% financial stake in Paramount Global. It’s a complicated structure, and that will extend to a possible sale. Zaslav has also met with Redstone about it.
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The key here is that movement is happening after months of speculation over whether Shari Redstone would sell her family business or not. According to Deadline, the mogul “is on a bit of a listening tour to see what she might be able to get if she decides to sell the company or part of it.”
Another stop from said tour was Skydance Media and CEO David Ellison, who expressed interest in acquiring Paramount Global through acquiring a majority stake in NAI earlier this year, Puck and Deadline reported recently. Zaslav has not made up his mind yet on which avenue he would choose: either buy Paramount Global or NAI, but bankers are already working on it.
Will Regulators Approve a Merger Between Paramount Global and Warner Bros. Discovery?
The merger between WBD and Paramount Global was one of the possibilities I explored in the piece we published yesterday, but there are a few issues with it from a legal point of view. We will assume, though, that the government approval would not happen under a second Trump administration, since he’s friendly with both Zaslav and Shari Redstone and more open to billionaires doing business even if that results in big corporate consolidation.
Warner Bros. Discovery is currently valued at around $30 billion, while some analysts estimate Paramount Global’s valuation at $10 billion — although that seems extremely low; the movie studio alone should be worth more than that. Regardless, as of today, WBD has a higher valuation than Paramount Global, which means this would not be a merger of equals.
The merged company, though, would include two major news networks (CNN and CBS), two streaming services (Max and Paramount Plus), and two legacy film studios (Warner Bros. and Paramount Pictures), in addition to several producers of animated content, not to mention additional assets like Showtime, Comedy Central, or BET now being under the same roof as TNT and TCM. All of that seems like a big no-no to regulators.
Despite that, though, there are some possible ways around it. First, it’s the “stripping for parts” route, where Zaslav would sell CBS and other smaller assets like BET to private equity. It was also reported earlier today that Byron Allen is back with a vengeance with an even bigger offer for BET ($3.5 billion now). At the same time, CBS owns the rights to the NFL, which is very appealing to WBD as they venture into the sports world with Max.
Paramount Plus and Showtime would likely be integrated into Max, giving them an excuse to increase the price even more. Paramount Pictures would probably work in a separate division to Warner Bros. Pictures under the WBD banner, similar to the 20th Century Studios situation over at the Walt Disney Company.
However, I still think that the consolidation alone of two film studios less than a decade after Fox and Disney merged should not be allowed — although Zaslav and his crew will hire lawyers much smarter than me to debate that.
If anything, this is going to be an interesting holiday for Shari Redstone and her family. What would you think about a merger between Paramount Global and Warner Bros. Discovery? If not WBD, who do you think will buy Paramount? Let us know your thoughts on our social media!
SOURCE: Axios
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