A new marriage is brewing in Hollywood. This is not a wedding between celebrities, but rather two studios whose merger can change the entertainment industry in the coming years. The giant Warner Bros. Discovery is exploring a union with Paramount, it has been revealed Axios. The digital media assures that the CEOs of both companies, David Zaslav and Bob Bakish, met this Tuesday in New York to discuss the details. If completed, the transaction would give new impetus to the war of the streamerswith which large companies struggle to expand their catalogs in the consolidation of digital platforms.
In accordance with Bloomberg, the talks took place at Paramount's offices in Times Square. The rapprochement between the parties is still at an early stage and the negotiations are preliminary in nature. The efforts of Zaslav, the CEO of Warner Bros. Discovery, have included conversations with Shari Redstone, the president of Paramount and majority shareholder of the studio through the company National Amusements, valued at 10 billion dollars. His father, Sumner Redstone, who died in 2020, was one of the main media moguls in the United States, having under his power Viacom and the networks CBS, MTV, Nickelodeon, Comedy Central, as well as the publisher Simon & Shuster, until it was acquired by Penguin Random House three years ago.
The combination between the companies would create a new giant in the industry. The companies could join forces by merging their digital platforms, Max and Paramount+, which could represent serious competition to the market leaders, Netflix and Disney+. In the news market, CNN, which has gone through a series of profound changes in recent years, would be reinforced with CBS, one of the most traditional and emblematic television networks in the United States.
Paramount, one of the most important studios in Hollywood, will contribute part of its valuable film catalog. The Godfather, Terminator, Transformers, Mission Impossible and top gun They are some of the company's treasures at a time when franchises and intellectual property are enormous assets for companies. The company also has juicy small screen titles, such as the Yellowstone universe, the rural drama that has become a sensation in the United States, the NFL Sunday show and children's hits such as Paw Patrol and Dora the explorer.
Warner, which has a valuation of around $39 billion, and Paramount have already hired banks to analyze the financial projections to close the operation. If given the green light, the merger will require a lengthy review process by US antitrust regulators. Zaslav's company knows this well, which had to wait eleven months for the entities to approve its alliance with Discovery, which was finalized in May of last year, but was announced in the summer of 2021. That agreement produced two years of tax benefits to the new entertainment giant. These will come to an end in April 2024, allowing Warner Discovery to make new acquisitions. According to Axios, the new procedure may be simpler, since Warner does not own an open television network (Paramount does). This would make a yes vote from the FCC, the Federal Communications Commission, more difficult.
Analysts, however, consider that the great obstacle to this new union is the large debt that both parties carry. That of Warner Bros. Discovery is around $43 billion, an amount that grew significantly with the merger. The company recently reduced it after discounting 12 billion, a discount that could not change the BBB credit rating. Paramount, on the other hand, has a debt of 15 billion dollars.
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