Paramount Skydance is reportedly preparing a bid to acquire Warner Bros Discovery, in a merger which could create one of the globe’s largest media conglomerates.
The Wall Street Journal revealed that while no offer has been submitted, Skydance Founder and former CEO David Ellison is leading the charge to acquire Warner Bros.
Ellison would likely receive funding from his father Larry Ellison, co-Founder of Oracle, who overtook Elon Musk and the richest man in the world last week -albeit only for a day.
While bids have yet been reported, Warner Bros Discovery currently has a market capitalisation of just over $42bn. Paramount’s comes just weeks after Skydance took over the film production company in a $8.4bn deal.
Sources told the Wall Street Journal Skydance intends to acquire all of Warner Bros Discovery’s media assets, which includes the Warner Bros film production company, as well as HBO, CNN, DC Studios and its range of sports broadcasting rights.
Upon the news of the potential merger on September 11, Warner Bros Discovery’s stock surged by 30% while Paramount’s increased by 15%.
A new major sports entity?
The potential merger would not only establish one of the largest media entities, but also one of the largest sports broadcasting conglomerates.
Warner Bros Discovery operates TNT and TBS, which holds rights to the MLB, NHL, NASCAR, All Elite Wrestling, the four tennis Grand Slams and US soccer matches, to name a few. TNT Sports in the UK also holds rights for the Premier League, UEFA Champions League, UFC and Premiership Rugby.
Skydance made its first major move in the sports broadcasting landscape by acquiring broadcast rights for the UFC in the US for $7.7bn as part of a seven-year deal set to commence in 2026.
This means that for the first time ever, UFC will move away from its traditional pay-per-view format for its numbered shows (UFC 300 for example) as all UFC events will take place on Paramount+, with some select shows being also held on CBS.
Is Skydance reacting to streaming competition?
While Paramount+ is one of the largest streaming services in the world with approximately over 77 million global subscribers, its start began almost as a reaction from the success of Netflix, Amazon Prime Video and Apple TV, streaming services that are not backed by traditional production companies.
Streaming services like Netflix have increasingly focused more on the value of broadcasting live sports, which in turn, has resulted in broadcast rights fees surging in value over the past several years.
Warner Bros Discovery has also restrategised its content rollout in recent months too, specifically dividing into two separate companies; Streaming & Studios, which will house the company’s film, television, and direct-to-consumer streaming operations, and Global Networks, which will focus on broadcast, cable, and digital channels including sports and news.
If Paramount can combine its sports broadcasting rights portfolio alongside Warner Bros Discovery’s, it could potentially become a new bolstered rival to match or exceed the bids for valuable sports rights from the likes of Netflix, Apple and Amazon.
