Paramount Skydance eyes Warner Bros. Discovery in potential mega-Hollywood merger

Paramount Skydance Corp., the Hollywood studio recently taken over by filmmaker David Ellison, is preparing a bid to acquire rival Warner Bros. Discovery Inc., according to people familiar with the matter, as per a Bloomberg report.

The prospective offer, backed by the Ellison family, would mark a seismic shift in the entertainment industry, reducing the number of legacy media giants to four from five. While Paramount is working with an investment bank on the bid, no direct talks had been held with Warner Bros. Discovery, the report added.

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Warner Bros. Discovery announced in June that it would split into two businesses - one focused on cable television, the other on streaming and studios. The Wall Street Journal reported that the Paramount offer would be a mostly cash deal for the entire company, though financial details have not yet been disclosed.

David Ellison's father, Larry Ellison - Oracle co-founder and the world's richest man, with a fortune of $383 billion - is backing the move, according to reports.

Shares of Warner Bros. Discovery surged 29% to $16.15 in New York on Thursday, giving the company a market capitalization of $40 billion and an enterprise value of about $71 billion, including net debt. Paramount also saw a boost, climbing 16% to $17.46, valuing the studio at more than $19 billion with net debt of $11.6 billion.

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As per the report, for Warner Bros. CEO David Zaslav, any deal would need to offer a significant premium, particularly as he positions the company's streaming and studio assets for higher valuation once separated from debt-heavy cable operations.

If successful, the merger would combine iconic film and TV franchises under one umbrella - from Paramount's Mission: Impossible, The Godfather, and Yellowstone, to Warner Bros.’ Harry Potter, Batman, Casablanca, and HBO classics like The Sopranos.

It would also give Paramount control of two major studio lots in Southern California, cementing its footprint in the entertainment capital.

The potential takeover comes amid sweeping changes in the U.S. media landscape, as legacy studios battle cord-cutting, declining box office returns, and stiff competition from Netflix, Google's YouTube, and other streaming players.

Industry-wide restructuring has led to production cutbacks, massive layoffs, and spinoffs of cable networks, including Comcast's plan to divest MSNBC, CNBC, and USA into a new Versant Media Group by year-end, the report added.

If the deal advances, it would be the biggest Hollywood consolidation since Walt Disney Co.'s $71 billion purchase of 21st Century Fox’s entertainment assets in 2019, reshaping the future of film and television.

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