Warner Bros Discovery and Paramount Global are in early talks to merge, according to multiple media reports.
The deal would see the owner of HBO channels and CNN team up with the studio behind the Mission Impossible films and CBS News.
Warner chief executive David Zaslav and Paramount chief Bob Bakish discussed a possible deal over lunch in New York this week, as first reported by Axios.
Talks are at an early stage and a deal may not happen, sources told the FT.
The deal would bring together two of Hollywood’s “Big Five” studios, with Warner and Paramount’s combined market value standing at $38bn (£30bn).
Streaming of shows and films has meant that traditional media companies have had to invest quickly to compete with the likes of Netflix, Amazon Video and Apple TV.
Warner and Paramount have had to commit to some deep cost-cutting, as they try to minimise losses running into the billions of dollars from their video streaming services.
As a result their stock prices continue to trade well below their highs in the early days of streaming.
According to Axios, the chief executives discussed over lunch how each company’s main streaming service, Paramount Plus and Max (formerly HBO Max), could merge to better take on rivals Netflix and Disney Plus.
Paramount is under a lot of pressure to find a buyer or strategic partner because of its levels of debt accrued in recent years whilst bulking up its streaming service.
Analysts say Warner has a slightly better cash position, partly due to some shrewd mergers.
Last year, AT&T’s WarnerMedia unit and Discovery merged to become Warner Bros Discovery, with a portfolio that included Discovery Channel, Warner Bros. Entertainment, CNN, HBO, Cartoon Network and franchises such as Batman and Harry Potter.
Media reports suggest that more consolidation is coming in the industry.
The dominance of Netflix and other big technology companies in the media space is undeniable – not just in terms of their financial performances but also through their extensive portfolios of shows and subscriber numbers.
According to Statista, Netflix added 5.9m paid subscriptions worldwide between March and June in 2023 and 8.8m from July to September.
The company’s crackdown on account-sharing in these months led to new accounts created, mostly in the US, Canada and the Europe, bringing its total number of subscribers to 247.2 million globally.
In comparison, Paramount Plus total subscribers stand at 63.4 million and Warner Bros Discovery 95 million as of November 2023.
