To illustrate you’ve got a crush on two individuals and you discover out considered one of them might such as you again. Do you simply begin relationship that individual, or do you discover out what the opposite individual thinks, too?
That is the place Warner Bros. Discovery finds itself at the moment. 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 might appear to be, in accordance with individuals acquainted with the matter.
“Crush” may very well be too sturdy right here. This isn’t a case of each corporations 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 simply need to survive and increase 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 return collectively. This yr, they’re the highest two U.S. film studios by income. Whereas smaller than Warner Bros. or Common, Paramount continues 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 provided that Warner Bros. Discovery owns CNN.
Deal construction might 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 govt 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 could be extra attractive than taking up Paramount World’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 stream. Shopping for Paramount World could be considered as beginning over for Zaslav, who hasn’t made many buddies in Hollywood along with his intensive reducing of each jobs and content material spending.
It is also attainable Comcast CEO Brian Roberts desires to carry on to NBCUniversal and is not keen on doubling down on legacy media proper now. NBCUniversal is not in merger talks with anybody proper now, in accordance with an individual acquainted with the matter. Spokespeople for Comcast, Warner Bros. Discovery and Paramount World all declined to remark.
Typically talking, Comcast’s NBCUniversal has comparable belongings to Paramount World. They each have broadcast networks: NBC for NBCUniversal and CBS for Paramount World. They each personal a slew of growing older cable networks. NBCUniversal’s embrace Bravo, E! and USA. Paramount World’s embrace Nickelodeon, MTV and Comedy Central. Each corporations have subscale, money-losing streaming companies. Paramount World owns Paramount+ (and Showtime), and NBCUniversal has Peacock.
NBCUniversal most likely is not a merger match with Paramount World, although. Each corporations’ possession of broadcast networks probably 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 need to mix with Warner Bros. Discovery as a substitute, leaving Paramount World with out an apparent dance accomplice? Would that lead Redstone to promoting her stake in Nationwide Amusements and letting another person, like David Ellison at Skydance, work out the long run for Paramount World?
These discussions have now begun. They are going to nearly actually warmth up within the coming weeks and months. The beginning gun has been fired. Welcome to 2024.
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Disclosure: Comcast is the mum or dad firm of NBCUniversal, which owns CNBC.
