We spent nearly a full year waiting and waiting for Skydance‘s deal to merge with Paramount to finally close, and before even one single movie has been released by the newly formed company, there’s already serious talk that another legacy studio could be in full-on upheaval again.
The Wall Street Journal reported Thursday that Paramount Skydance was preparing a majority cash bid for Warner Bros. Discovery — an offer backed by David Ellison and his uber-wealthy father Larry Ellison — that would look to buy all of WBD, including its movie studio, its library, and its cable networks.
WBD stocks skyrocketed after the report, but the immediate feeling is that this deal would be hard to actually fathom — or even come to fruition. Warner Bros. and Paramount are two of the last legacy major studios from Hollywood’s Golden Age, and combining them under one corporate roof may seem near-impossible to comprehend (and also a little gross).
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Look, we’ve been down this road before, and M&A activity is just par for the course. Disney bought Fox’s film studio, Amazon bought MGM, Warner Bros. has changed hands from AT&T to Discovery, and this won’t be the last mega merger or transaction to shake up the business.
And there’s also no guarantee this happens. Companies kick the tires on deals all the time, other buyers emerge, things fall through. Just look at how long and drawn out the Paramount-Skydance deal was in the first place.
A sale of Warner Bros. Discovery has also long been on the table, but selling it to another legacy studio that literally just beefed up and hasn’t set its agenda yet wasn’t on anyone’s bingo card. And it’s left us with a few questions.
First of them being, wait, what? Below are the others.
How Is This Even Legal?
Would this not be a monopoly? Wouldn’t a company of the combined size of Paramount/Skydance + Warner Bros. Discovery set off alarm bells? There’s no doubt that a deal of this magnitude would be subject to Justice Department scrutiny, and it’s hard to know how this administration would behave toward such a move, given that the Paramount/Skydance deal didn’t even go through until CBS News settled President Trump’s lawsuit against it and the new owners agreed to appoint an ombudsman to look over CBS News.
How would Trump react to his administration now getting to decide the fate of CNN? (Remember when people like WBD CEO David Zaslav thought a Trump administration would be more, not less conducive, to M&A?)
One of the big hurdles Paramount and Skydance likely wouldn’t have to worry about is the FCC. It would be a big no-no for a media conglomerate to own not one, but two broadcast channels. But consider recent history: NBCUniversal has had no trouble operating both MSNBC and NBC and Fox operating Fox News and its Fox broadcast channel.
What Could Happen to HBO Max?
David Ellison has already made clear his priorities around streaming, both in drastically improving the underlying tech of Paramount+ and also combining Paramount+ with its free, ad-supported Pluto TV. Doing that would attract more users and greatly reduce costs of having to operate two separate streamers.
If you’re adding HBO Max into the mix and treating each service’s subscribers as apples to apples, the 77 million subs on P+ combined with the 125 million across HBO Max, Discovery+, and HBO’s linear channel would better help it rival Netflix’s 300 million+ subscribers and a newly beefed-up Disney+ that now includes Hulu and ESPN.
But if Ellison is all about consolidating, do they really need two (or three or four) streamers? Disney is already sunsetting the standalone Hulu app and integrating it into Disney+ as a tile, so envisioning a Paramount+ in which there’s an HBO tile and Discovery tile alongside ones for Showtime and Pluto could be the way this is headed.
HBO as a brand itself is too valuable to discard, something WBD realized when they literally put “HBO” back under the name “HBO Max” after a monumentally dumb decision to remove it. But what use would Paramount and Skydance have for it?
How About TCM?
This one is trickier and sadder to think about. Maybe it helps the library of TCM to be able to have WB classics alongside Paramount ones more easily, but TCM is an anomaly in this day and age when cable networks already have dwindling value. It’s a channel with no commercials that only plays old movies. When IndieWire led the charge in raising a stink about TCM going away under David Zaslav’s watch, Zaslav himself rallied to keep it because he is an old-fashioned movie wonk.
Would David Ellison have the same level of nostalgia for the channel? Paramount has held firm with its cable channels, but who knows if this would continue to be one of them.
Why Does Paramount Want Both the Movie Studio AND the Cable Networks?
Perhaps the most curious detail about the Wall Street Journal’s report is that Paramount Skydance would be looking to buy all of WBD and not just one half of the business. The cable networks empire of CNN, TBS, TNT, Food Network, HGTV, Discovery, and more are not worth what they once were, and Zaslav this summer announced plans to split the company in two, effectively going back to a structure before Discovery combined its cable channels with the Warner Bros. movie studio.
By splitting them up, it makes the more valuable part — the studio and library — more attractive to other buyers. You could see Apple or Amazon or another tech giant get involved and not have to burden themselves with the cable channels that are hanging on by a thread. Private equity could also get involved and further split the company into parts.
Paramount may have a need for the cable networks to be a behemoth alongside Comedy Central and MTV, and it would likely want to combine WBD’s many sports rights with its own. But though it would cost a pretty penny — at least $41 million plus $35 billion in debt — Ellison can afford it and can potentially get ahead of other bids as part of a bidding war by diving into the pool early.
Jobs?!?!
When we reported on the Paramount/Skydance deal initially, we argued that getting a guy like Ellison in charge was arguably a better-case scenario than having private equity buy Paramount or even Sony absorbing all of it. It meant fewer redundancies in terms of studio lots, talent, and the types of movies and shows that might get made.
With an arrangement like this, all bets would be off. Paramount under Skydance is currently planning $2 billion in cost cuts, which has been reported to result in 3,000 jobs lost.
A combo with WBD would likely mean a whole wave of executives that would be out. Warner Bros. Pictures and Paramount Pictures could easily fall under one umbrella, as would CNN and CBS News and all of cable. Would they need two lots to operate from? How many more jobs would be on the chopping block?
But at least Superman could finally do a crossover with the Transformers.
