Recent discussions between Warner Bros. Discovery and Paramount Global have surfaced as both media entities contemplate a potential merger, confirmed by sources to Variety.

The CEOs, David Zaslav from Warner Bros. Discovery and Bob Bakish from Paramount Global, engaged in discussions over a potential merger in a recent New York lunch meeting on Tuesday. Sources also revealed that Zaslav had conversations with Shari Redstone, whose National Amusements Inc. holds a controlling stake in Paramount Global, about the prospects of uniting the companies.

Representatives for Paramount Global and WBD have refrained from commenting on the matter. Axios initially broke the news about these discussions, specifying that the talks are currently at a very preliminary stage.

While specifics regarding the terms of a possible merger remain undisclosed, both companies have involved bankers in this process. Paramount Global reported a long-term debt of $15.6 billion by the end of Q3, significantly less than Warner Bros. Discovery's $43.5 billion. However, in terms of market value, Warner Bros. Discovery leads with a market capitalization of $28.4 billion, surpassing Paramount Global's $10.3 billion.

The potential merger aims to combine assets in television, film, sports, and streaming, seeking enhanced scale and operational efficiencies. Particularly, the focus appears to be on integrating their Max and Paramount+ premium streaming services to compete more effectively with industry giants like Netflix, Disney's Disney+, and Hulu.

If the merger occurs, it's anticipated that Warner Bros. Discovery would gain access to Paramount Pictures' esteemed film franchises, including Terminator, Transformers, Mission: Impossible, and more. Conversely, Paramount Global could benefit from the likes of Warner Bros. Pictures' DC Extended Universe films, Harry Potter, and Lord of the Rings franchises.

The merged entity is also poised to consolidate their television operations, incorporating a broad array of networks such as CNN, HBO, CBS, Comedy Central, TBS, Discovery Channel, Cartoon Network, Food Network, HGTV, TLC, MTV, Nickelodeon, and others.

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Proposed Warner Bros-Paramount merger may result in streaming service to challenge Netflix

Warner Bros. Discovery's formation stems from Discovery Inc.'s acquisition of WarnerMedia from AT&T, while Paramount Global resulted from the CBS-Viacom merger in 2019, driven by Shari Redstone. Amidst these discussions, reports suggest Redstone is exploring the sale of her NAI stake and Paramount Global potentially restructuring its divisions to cut costs.

Senior executives at Warner Bros. Discovery appear keen to expedite discussions with Paramount Global, driven by speculations about Redstone's potential divestiture. These recent developments suggest a significant transformation in the media landscape might be on the horizon.