Warner, Paramount discuss possible merger

Warner Bros. Discovery (WBD) and Paramount are in talks for a possible merger in a deal that would create one of the biggest news and entertainment giants, Axios reported on Thursday, citing multiple people aware of the discussions.

Warner Bros. Discovery chief executive officer (CEO) David Zaslav met with Paramount Global CEO Bob Bakish on Tuesday in New York City to discuss a possible merger, Axios reported.

While the talks are at an early stage, with no formal negotiations in progress, a potential merger could bring together some of the most prominent brands in Hollywood and cable television.

While Warner Bros. owns its own studio, apart from cable networks such as CNN, TNT, and HBO, Paramount also owns its own major studio, in addition to cable channels such as MTV, Nickelodeon, Comedy Central, the CBS broadcast network, and the Paramount+ streaming service.

WBD’s market value was around $29 billion as of Wednesday, while Paramount’s was just over $10 billion.

Axios reported that there was uncertainty whether WBD would buy Paramount Global or its parent company, National Amusements Inc. (NAI), but cited an unidentified person aware of the talks as saying that both options are on the table.

The background to Warner’s interest is the ongoing exploration by NAI, which is in talks with various entities, including Skydance Media and RedBird Capital.

Any potential merger, however, faces substantial regulatory hurdles.

The media and entertainment industry has seen a wave of consolidations in the past decade, with both Warner and Paramount being key constituents in some of the largest mergers.

Consolidation is the only way ahead to compete effectively, particularly in an overcrowded streaming market where customer retention is increasingly challenging, media analysts have said.

But in the US, the regulatory environment under the Biden administration has been particularly tough on industry consolidation, with the scale of the merger likely to draw the scrutiny of antitrust regulators.

In September, Warner Bros. had opened a “capability centre” in Hyderabad, its first greenfield office in Asia that would act as a strategic hub for the company’s operations in India.

Meanwhile, in India, the merger between Sony Pictures Entertainment and Zee Entertainment Enterprises Ltd, aimed at creating a $10 billion media and entertainment powerhouse, is currently facing a delay. The deal was initially announced two years ago.

Zee has been in talks with Sony Group’s India unit to extend the merger deadline, which expires today (21 December).

The delay follows regulatory issues, including a ban on Zee CEO Punit Goenka from directorships of any listed company by India’s markets regulator, which was later lifted.

Zee is keen on the merger, with the expectation that regulatory approvals and the relisting process for the Zee-Sony merger will take three to four months once the extension is granted.

A new agreement between Sony’s India business Culver Max and Zee provides for an extra 30 days to seal the deal if the merger terms are not met by either parties before the effective date, Mint reported on Thursday.