Merger talks are in the air since Warner Bros. Discover CEO David Zaslav and Paramount (PARA) Global CEO Bob Bakish got together earlier this week to discuss combining their companies. Axios reported Dec. 20 the two executives met for several hours on Dec.19 in Paramount’s headquarter office in New York City and talked about how an acquisition could benefit them, especially in the streaming sector. 

WBD’s potential takeover of Paramount would result in a conglomerate with a vast portfolio. Specifically, a potential acquisition would allow Zaslav to take on Netflix and The Walt Disney Company’s streaming services by combining Max and Paramount+. It could also give both companies streaming rights to major sports events like March Madness and Champions League access in the U.S., as well as franchises like NFL on CBS. In addition, a merger could bring huge potential in cable, parks and experiences and content licensing to WBD. 

Zaslav may be considering buying either Paramount or its parent company National Amusements Inc. (NAI), Axios reported, and is said to also have been in talks with NAI president Shari Redstone. While the deal may never materialize, investors made it clear that the hypothetical acquisition would not a favorable one. Both WBD and Paramount stocks fell on reports of merger talks. Investors’ negative reaction reflects a lack of positive impact from major media acquisitions, analysts say.

“Over the last 10 or so years, major media mergers and consolidations didn’t necessarily solve the primary issues confronting a lot of these companies,” Brandon Katz, an entertainment industry analyst for Parrot Analytics, told Observer. “It comes at a genuine human cost.”

WBD itself is the result of Discovery’s acquisition of WarnerMedia in 2022. The chosen leader Zaslav used his position to cancel nearly completed projects like Batgirl and cut hundreds of jobs. He also slashed WarnerMedia content under various divisions including Warner Bros., Turner Classic Movies and HBO Max’s content library. The aggressive cost-cutting measure was to serve Zaslav’s goal of saving the new company $3.5 billion. He’s achieved it, but still has around $40 billion in debt to confront moving forward. 

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Industry creatives may also oppose this deal. Zaslav was at the center during the writers and actors strikes this year as representing the wealth of major studios, which many Hollywood workers do not have access to. His comments admitting that he agreed with the strikers’ demands after allowing the boycotts to go on for months were also not received well. 

“Even though Zaslav’s strategies have essentially helped WBD stock in 2023 versus a massive decline in 2022, there’s no doubt the creative community is not a huge fan of his practices,” Katz said. “While they do make some logistical business sense, giving Zaslav even more control over a wider berth of entertainment assets will likely not result in an overly talent-friendly ecosystem.”

Paramount’s troubles are also a cause for concern. The company has around $15 billion in debt and is currently selling off assets to free up cash, the latest being Simon & Schuster. Analysts like Katz believe Paramount has been in a position to be acquired for years—potential buyers that have been engaged in deal talks include Skydance Media and Redbird Capital. But Redstone, Paramount’s majority stakeholder and president of its parent company, has fought to hold on, knowing that losing Paramount would change her position as one of the power players in the media landscape.

“A sense of reality is setting it that it is a subscale competitor at a time when there are extremely well resourced challengers in Big Tech and fellow legacy media companies that are frankly much bigger than Paramount,” Katz said. 

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Read the original story Warner Bro. Discovery’s David Zaslav Eyes Another Mega Acquisition: Analyst Weighs In and others by Nhari Djan at Observer.