Tongues were wagging in Hollywood and on Wall Street last week following the revelation that Warner Bros Discovery chief executive David Zaslav and Paramount chief Bob Bakish had met to discuss a possible merger between the entertainment giants.
The deal could be one of the most significant Tinseltown takeovers since Disney acquired several major 21st Century Fox assets, including the 20th Century Fox film and television studios and the majority of National Geographic, in 2019. Perhaps most significantly for film fans, that arrangement also included the rights to a raft of new Marvel characters to come under Disney’s ownership, including Deadpool, who will enter the MCU in next year’s third instalment, as well as the X-Men and Fantastic Four, the latter of which have a film slotted for 2025.
While there are rumours that some on the latter side are hesitant to make such a move, a Warner-Paramount deal could create a company with a market value of about $40 billion which, while still smaller than rival Disney, worth about $166 billion in Friday’s trading, would see the value of Warner Bros Discovery, the larger of the two merged entities, increase by about 30 per cent overnight.
Paramount’s key properties include CBS, major film studio Paramount Pictures and former Viacom cable channels that include MTV, Comedy Central, BET and Nickelodeon. Warner Bros Discovery, meanwhile, formed from the merger of the two titular media giants last year, is home to household names including DC Comics, HBO, the Discovery Network and the Turner Broadcast channels, namely CNN, TBS and TNT.
It’s an impressive list, but what would this mean for audiences? Perhaps the first tangible effect of a merger for viewers would be a combination of the two entertainment giants’ streaming services, which have been somewhat slow out of the blocks compared to rivals Disney+ and Netflix. The Max/Discovery+ service currently boasts about 95 million global subscribers, while Paramount+ has about 63 million. Some of these subscribers are undoubtedly signed up to both, but a combined service would clearly compare favourably to Disney+’s 105 million subscribers, and at least be somewhat closer to global leader Netflix’s 247 million.
The era of streaming slowdown has seen both Disney and Netflix struggle to attract and retain subscribers, with both introducing ad-supported plans in many markets, further consolidation seems inevitable, especially due to the costly nature of the system that has proven profitable for few in the space. Quite simply, compared to the early days of "cord-cutting" when viewers were gleefully cancelling expensive pay-TV subscriptions to subscribe to one or two streaming services, there are now too many streamers for people to handle, leading to viewers picking and choosing which they prioritise. A comprehensive subscription plan to all of them can run to significantly more than the pay-TV plans of old, and it has become increasingly tough for smaller players and legacy studios to compete with tech giants such as Netflix, Amazon, and Apple.
And while some may view services such as Disney+, Paramount+ and Max to be successful from afar, it was reported in September, that till date, Netflix is the only streaming service to turn a profit. Simply put, the system as it stands doesn't seem to be working for anyone, neither audiences nor the streamers themselves.
A combined Warner/Paramount service would feature properties including Star Trek, DC Comics, Harry Potter, Mission Impossible, Transformers, Spongebob Squarepants and Looney Tunes, and might prove a significantly more tempting offer at a single price point than the current separate services. For viewers in the UAE, though, there would probably be little action required to access the new service since Warner Discovery and Paramount both have deals in place with OSN, and there’s no reason to assume that would change following a merger. In fact, things could get even more synergistic.
OSN, meanwhile has been making its own merger moves as of late, joining forces with Middle Eastern music streamer Anghami to create the biggest streaming platform in the region.
The proposed deal should also be relatively straightforward compared to the Disney/Fox tie-up, which saw US regulators demand that several Fox assets, including Fox News, Fox Sports and Fox TV, were not included in the deal under anti-trust laws as Disney already owned the ABC Network.
Despite its dominance on the cable side, Warner Bros. Discovery does not currently own a broadcast TV network, clearing a more workable path to a takeover. The main potential complication for regulators would come in how they respond to the idea of taking Hollywood’s "Big Five" studios down to four. That seems likely to prove less problematic, however, not least because Paramount is currently about $15 billion in debt, with a negative cash flow.
Faced with the alternative of a repeat of former "Big Six" member MGM’s 2010 bankruptcy, regulators would surely take a "lesser of two evils" stance. International viewers could also see a change in the way they get their news. Paramount-owned CBS News has long been a respected news provider domestically. Combined with CNN’s global footprint, the merged company could be a huge player on the worldwide news stage, and could affect local players, such as the CNN Business Arabic venture that launched earlier this year.
You might think this could attract the attention of regulators too, but the two previously held merger talks around the turn of the century. Sources close to that, eventually uncompleted, deal reported that the view at the time was that the two organisations would complement each other. Of course, the talks are at a very early stage and could yet come to nothing. Warners is not the only suitor for Paramount and its parent National Amusements Inc, either. Nai has made no secret of its financial plight and has already unloaded book publisher Simon and Schuster, while it is currently in talks to sell off its BET cable TV network.
Warners should also not be viewed as a white knight riding in to save the troubled smaller studio – the larger partner in the proposed deal is not in great financial shape itself. Warners’ net debt stood at $43 billion at the end of September, and it’s far from unthinkable that an organisation in better financial shape could come in with a more attractive offer. Both Mission Impossible producer Skydance Media, which already has a co-production and co-financing deal with Paramount, and AC Milan owner RedBird Capital Partners were reported to be eyeing a potential deal for a majority stake in Nai earlier this month, and Warners is not the only show in town.
It may be the most intriguing show in town, however, in large part due to the potential for combined properties. Just as the Disney/Fox deal brought Deadpool and the Fantastic Four into the MCU, and the 2019 Viacom-CBS merger united the Star Trek TV and film franchises under one roof after years as separate entities, a Warners/Paramount deal could see Bugs Bunny locking horns with Captain Kirk, Barbie joining Tom Cruise to scale the Burj Khalifa in a future Mission Impossible, or any number of (probably more credible) hybrids from the combined studios’ repertoire.
But more concerningly for film fans in the region and across the world, it could just mean fewer options moving forward, as a merger will likely mean that the two will produce fewer films and television series so as not to overcrowd their release schedule.
The move could also see completed projects that fans are looking forward to cancelled. Warner Bros Discovery has received criticism for its shelving of films such as Batgirl, directed by Belgian-Moroccan filmmakers Adil El Arbi and Bilall Fallah. The recent scorn the studio received for cancelling the Looney Tunes film Coyote vs Acme actually led to the studio reversing the decision, and is reportedly still currently shopping it to other buyers. Similarly, Paramount received backlash online for announcing it was cutting back on new original animation projects, instead sticking to proven properties.
But if a merger can get the two studios back on track financially, perhaps they'll be able to take a more bold approach to content, leading to an exciting new future for audiences everywhere.
