By Gary Symons
TLL Editor in Chief
Earthshaking news for the entertainment and licensing industries, as Paramount Skydance is preparing a potential bid to acquire Warner Bros Discovery, Reuters reported Thursday, citing a source familiar with the bid.
The move could unite two of Hollywood’s largest and most successful studios, and reshape the global entertainment industry. The news, first reported by the Wall Street Journal, sent shockwaves through the media sector, with shares of Warner Bros Discovery soaring as much as 30% and Paramount jumping 15% after Reuters confirmed the possible bid.
The proposed deal would be backed by the Ellison family, including Skydance head David Ellison and his father, Oracle co-founder Larry Ellison, according to the Journal. The Ellison family are flush with cash right now, as share prices of Oracle have soared in recent months, making Larry Ellison the world’s richest person.
The Ellisons have played a central role in financing Skydance’s rapid expansion, most recently that $8.4 billion acquisition of Paramount Global that closed in August.
If successful, the acquisition would bring together an array of high-profile entertainment assets under one corporate roof. (See a summary of the companies’ assets below)
“This deal is the Hollywood equivalent of a sequel no one expected but everyone sort of saw coming,” said Jeremy Goldman, an analyst with eMarketer, in an interview with Reuters.
No formal offer has been submitted, and the talks remain preliminary, according to reporting from the Washington Journal Warner Bros Discovery and Paramount have not surprisingly declined to comment on the reports. Publicly traded companies are typically careful not to release news of this nature, that could affect their stock price, until a formal bid was prepared and approved by the board of directors.
High Stakes as Tech Companies Continue Takeover of Media
The potential acquisition underscores the intensifying pressure in the media industry, as legacy studios seek scale and financial heft in order to compete with technology giants like Apple and Amazon in streaming. Both companies have invested heavily in original content and live sports rights, raising the stakes for traditional entertainment conglomerates.
The Ellisons, with their massive stake in Oracle and entertainment experience in Skydance, are among the very few people who could successfully compete with those industry heavyweights.
Adding to the stakes for WBD, CEO David Zaslav has been working on a restructuring plan to split its declining cable networks from its studio and streaming businesses, attempting to unwind a merger completed less than four years ago.
Many analysts say a cash-backed offer from the Ellisons could prove more attractive to Warner shareholders than waiting for a turnaround, a theory bolstered by the huge increase in share value for the two companies as news of the bid emerged.
“For WBD shareholders, a cash-rich exit is far more appealing than waiting around for Zaslav’s restructuring magic to (maybe) pay off,” Goldman told Reuters.
Skydance, by contrast, has been pursuing aggressive expansion, with David Ellison pledging to bolster Paramount’s film pipeline, streamline costs, and reposition its Paramount+ streaming platform. Adding Warner Bros Discovery’s content and subscriber base would instantly create one of the largest players in the global entertainment market, and create a much more attractive streaming service for consumers.
Deal Will Face Scrutiny From U.S. Regulators
Legal experts caution that, even if a formal bid is made and accepted, the deal would be far from done. Because Skydance Paramount and WBD are so powerful within the entertainment industry, any prospective deal would almost certainly draw close scrutiny from antitrust regulators.
“The DOJ will want to investigate whether the merger could lead to higher prices for consumers, reduce bargaining power for creators and diminish content diversity,” said Andre Barlow, a Washington-based antitrust attorney, in comments to Reuters.
A merger of Paramount Skydance and Warner Bros Discovery could potentially reshape the nature of competition in theatrical distribution, home entertainment, and licensing. Analysts also warn that combining cable assets could increase bargaining leverage with advertisers and cable providers, raising costs for distributors.
It’s also worth noting that WBD is larger than Paramount Skydance, with a market value nearly double that of its potential acquirer.
Warner Bros Discovery’s market value stood at about $30 billion before the reports came out, with net debt of a similar size. Paramount Skydance was valued at $16.4 billion.
Should the deal proceed, the combined entity would emerge as a formidable rival to Netflix, Disney, Amazon, Apple and Comcast in streaming.
Combined Assets of Paramount Skydance and Warner Bros Discovery
If Paramount Skydance moves forward with a bid for Warner Bros Discovery, the combination would create one of the largest entertainment companies in the world. Here’s a quick look at the major assets each side brings to a potential merger.
Paramount Skydance
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Studios and Franchises: Paramount Pictures is one of Hollywood’s oldest studios, with franchises including Star Trek, Mission: Impossible, and Transformers. Skydance contributes financing and production ties, including partnerships with Netflix and Apple.
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Television and News: CBS network, CBS News, Showtime, and a slate of popular television series produced by CBS Studios.
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Streaming: Paramount+ has more than 70 million subscribers worldwide but has struggled with profitability. Pluto TV, a free ad-supported streaming service, is also part of its portfolio.
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Kids and Family Content: Nickelodeon, home to SpongeBob SquarePants, Dora the Explorer, and other family-friendly hits.
Warner Bros Discovery
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Studios and Franchises: Warner Bros Pictures and Warner Bros Television, with a library that includes Harry Potter, The Matrix, DC Comics superheroes like Batman and Superman, and a century of film and TV content.
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Streaming: HBO Max (recently rebranded as Max) is one of the leading premium streaming platforms, with flagship shows such as Game of Thrones, The Last of Us, and Succession.
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News and Nonfiction: WBD owns CNN, a major global news network, and Discovery’s lifestyle brands, including HGTV, Food Network, and Animal Planet.
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Sports Rights: WBD owns Turner Sports, which holds broadcast rights to the NBA, NHL, and Major League Baseball.
Together, the two companies would rival Netflix, Disney, and Amazon in both scale and global reach, and create an even more powerful licensing behemoth that owns many of the world’s top entertainment and character properties.