To illustrate you may have a crush on two folks and you discover out one in all them could such as you again. Do you simply begin courting that individual, or do you discover out what the opposite individual thinks, too?
That is the place Warner Bros. Discovery finds itself immediately. The corporate has held preliminary merger talks with Paramount World, the media conglomerate managed by Shari Redstone. Warner Bros. Discovery Chief Govt David Zaslav met with Paramount World CEO Bob Bakish on Tuesday to debate what a merger of the businesses could appear to be, in response to folks aware of the matter.
“Crush” may very well be too robust right here. This isn’t a case of each firms lusting for one another. It is extra of a partnership of necessity. Neither firm has 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 only wish to survive and enhance their share worth.
However possibly Warner Bros. Discovery would relatively merge with Comcast’s NBCUniversal — if Comcast is open to it. There could also be regulatory points with NBCUniversal. It is unclear whether or not officers would permit Common and Warner Bros. to come back collectively. This 12 months, they’re the highest two U.S. film studios by income. Whereas smaller than Warner Bros. or Common, Paramount remains to be a prime 5 studio most years.
Comcast additionally owns cable information channel MSNBC, which can or is probably not 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 might theoretically give Zaslav debt-free earnings to strengthen the mixed firm’s steadiness sheet.
Bob Bakish, president and chief government officer of Viacom, attends the fourth day of the annual Allen & Firm Solar Valley Convention, July 11, 2023 in Solar Valley, Idaho.
David A. Grogan | CNBC
That is perhaps extra engaging than taking over Paramount World’s $15 billion of debt. Warner Bros. Discovery has practically $45 billion of debt and has labored to deliver down its leverage all 12 months by boosting free money circulate. Shopping for Paramount World is perhaps considered as beginning over for Zaslav, who hasn’t made many pals in Hollywood along with his intensive reducing of each jobs and content material spending.
It is also doable Comcast CEO Brian Roberts desires to carry on to NBCUniversal and is not considering doubling down on legacy media proper now. NBCUniversal is not in merger talks with anybody proper now, in response to an individual aware of the matter. Spokespeople for Comcast, Warner Bros. Discovery and Paramount World all declined to remark.
Usually talking, Comcast’s NBCUniversal has comparable property to Paramount World. They each have broadcast networks: NBC for NBCUniversal and CBS for Paramount World. They each personal a slew of ageing cable networks. NBCUniversal’s embrace Bravo, E! and USA. Paramount World’s embrace Nickelodeon, MTV and Comedy Central. Each firms have subscale, money-losing streaming providers. Paramount World owns Paramount+ (and Showtime), and NBCUniversal has Peacock.
NBCUniversal most likely is not a merger match with Paramount World, although. Each firms’ possession of broadcast networks doubtless makes that deal a non-starter.
Opening discussions with Paramount World ought to give Warner Bros. Discovery a learn on the place Comcast stands on deal-making. Is Comcast OK with Paramount World and Warner Bros. Discovery merging? Or does Roberts wish to mix with Warner Bros. Discovery as an alternative, leaving Paramount World with out an apparent dance companion? Would that lead Redstone to promoting her stake in Nationwide Amusements and letting another person, like David Ellison at Skydance, work out the longer term for Paramount World?
These discussions have now begun. They may virtually actually warmth up within the coming weeks and months. The beginning gun has been fired. Welcome to 2024.
Do not miss these tales from CNBC PRO:
Disclosure: Comcast is the mother or father firm of NBCUniversal, which owns CNBC.