Two months after Skydance Media acquired Paramount in an $8 billion deal, the combined company has now set its sights on acquiring Warner Bros Discovery. David Ellison, the son of the co-founder of Oracle, Larry Ellison, who is among the richest people in the world, believes he can combine the companies and integrate them on a single technology stack. Old media companies are consolidating in a rush to achieve scale online and compete with the relative newcomer Netflix.
Paramount and Warner Bros, both storied studios founded in the age of silent movies, extended their respective empires into television with the growth of cable but despite their massive libraries of intellectual property have failed to match the rise of Netflix in the online era.
Adding Warner Bros Discovery to Paramount Skydance would potentially include television assets like CNN, TBS, and TNT. It could pre-empt a planned spinoff of cable channels and use them to bolster the Paramount+ online proposition.
A merger of Paramount+, HBO Max, and Discovery+ would create a consolidated offering with more firepower to compete with Netflix.
Netflix currently has a market capitalisation of over $500 billion, which is significantly more than the Walt Disney Company, which is valued at around $210 billion. In comparison, the creation of Paramount Skydance was valued at $28 billion. Warner Bros Discovery has a market capitalisation of around $47 billion.
No formal offer has been announced so far, and it would require regulatory approval, so the deal may not go ahead, or it could attract other bidders.