Recent Developments in the Entertainment Industry
The Warner Bros Discovery (WBD) share price experienced a significant surge of 33% on Thursday, following a report by The Wall Street Journal that the company is being targeted for acquisition by Paramount Pictures. This rumor has been circulating in Hollywood for several months, but the recent report suggests that David Ellison, the new chairman and CEO of Paramount, is preparing an offer to acquire WBD.
Background on the Potential Acquisition
David Ellison, who is 42 years old, became the chairman and CEO of Paramount after the company merged with his SkyDance studios in an $8.4 billion deal. His father, Larry Ellison, the founder of Oracle, is worth approximately $380 billion and could potentially provide funding for the merger. In fact, Larry Ellison invested around $6 billion in the Paramount acquisition, with Redbird Capital contributing an additional $2 billion.
Implications of a Potential Merger
A merger between Paramount and WBD would require approval from the Federal Communications Commission and would be a costly endeavor. The increased share price of WBD on Thursday brought the company’s market capitalization to around $40 billion, while Paramount’s market capitalization is around $35 billion. If the merger were to occur, it would likely have significant implications for the entertainment industry, potentially reducing the number of major studios and leaving only four legacy studios: Disney, Universal, Sony, and the combined Paramount-WBD entity.
Creative Implications and Streaming Services
The potential merger has raised concerns among creative professionals in Hollywood, as it would eliminate one of the major studios and reduce the number of buyers in the market. However, David Ellison has expressed his passion for creating theatrical entertainment, and the merger could bring together Paramount+ and HBO Max under one banner, potentially challenging Netflix’s dominance in the streaming market. Currently, Netflix has over 300 million global subscriptions, while Paramount+ has around 77.7 million subscribers and HBO Max has around 125.7 million subscribers.
Future Plans and Expectations
David Zaslav, the CEO of WBD, has stated that he expects the company’s streaming service, HBO Max, to reach 150 million subscribers next year. Additionally, Paramount recently hired former Meta executive Dane Glasgow as its Chief Product Officer, which could indicate a focus on building a modern studio with streaming and technology at its core. The potential merger between Paramount and WBD is likely to take some time to materialize, but it could have significant implications for the entertainment industry and the streaming market.
