Warner Bros. Discovery CEO David Zaslav Held Paramount Deal Talks


David Zaslav rocked the leisure business in 2022 with a historic merger, following it up by slashing prices on the newly created Warner Bros. Discovery to chop debt and set the corporate up for development with a brand new streamer, Max. Within the course of, he laid off 1000’s of workers, shelved accomplished initiatives like “Batgirl,” made a disastrously ill-fated determination (since reversed) to place Chris Licht in command of CNN, and usually outraged Hollywood.

Now, with a bunch of free money movement and the swagger to go together with it, plus the necessity for scale to compete with Netflix and Disney, he is reportedly in talks to do one other huge deal for one more iconic set of leisure property.

Zaslav has met with Paramount International CEO Bob Bakish and Shari Redstone, the proprietor of Paramount mum or dad Nationwide Amusements Inc., a few deal to amass Paramount or NAI, Axios reported at the moment.

A deal — which might take completely different kinds and isn’t assured — would create a brand new leisure big and will kick off extra business consolidation as media corporations scramble to discover a workable mannequin for streaming and compete with Netflix. WBD declined to remark; Paramount did not instantly reply to a request for remark.

The Axios report follows others that Skydance and its backer RedBird Capital have talked to Redstone a few deal for Paramount. Paramount struggles with declining income and streaming losses and an acquisition is broadly seen as all however inevitable after Redstone has proven openness to a deal after lengthy resisted promoting.

Zaslav has laid the groundwork in current weeks for extra dealmaking. He and WBD board member John Malone each made feedback in November suggesting the corporate was paying down debt and build up free money movement to arrange acquisitions within the subsequent two years.

The concept of a Paramount takeover by WBD has recently met with enthusiasm on Wall Road, the place mergers of legacy media corporations are seen as a foregone conclusion. And WBD would not personal a broadcast community, which suggests its acquisition of Paramount’s CBS would not be a serious regulatory problem — as could be the case if NBC mum or dad Comcast had been to make a deal to amass Paramount, as some media observers have speculated.

Needham analyst Laura Martin for one talked up a Paramount sale to WBD in November, saying its precious property might be match with an even bigger firm. Paramount’s CBS and WBD’s CNN collectively would make a formidable information group, and the businesses’ streaming providers — Paramount+ and Max — have complementary strengths.

However shares of each corporations declined at the moment amid information of the talks, Warner by 5.6% and Paramount by 2%, and different analysts threw chilly water on a deal being a cure-all.

Consolidation will not repair legacy media’s streaming woes, LightShed Companions argued in a December 19 word. They’re too late and lack the expertise and technique to construct scaled streamers whereas managing their linear TV declines, and layering on extra linear TV property to a WBD or Paramount “seems like a monetary dying sentence,” LightShed wrote. LightShed’s Richard Greenfield doubled down on that argument Wednesday in an interview with CNBC, advocating for WBD to exit the streaming wars and deal with being an important “arms supplier” creating content material for different consumers.

It is true that WBD and Paramount may gain advantage from efficiencies in relation to content material creation, and Zaslav, who has talked up the worth of dwell sports activities, might be Paramount’s sports activities rights as a method of boosting that a part of WBD’s enterprise, Edward Jones analyst David Heger informed Enterprise Insider.

However traders could also be gun shy given WBD’s still-heavy debt load (of $45 billion), the time it takes for large mergers’ advantages to be realized, and the potential that Zaslav would want to lift extra debt to do one other huge deal, Heger added.

“Traders may be in that show-me mode of, ‘How are you going to make this work?'” he stated.


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