What Would Warner Bros. Discovery-Paramount Merger Mean for Cable TV?



Mega media merger mania is once again afoot in Hollywood with very, very early talks between Warner Bros. Discovery‘s David Zaslav and Paramount Global’s Bob Bakish about a potential merger of the two companies.

Analysts and industry sources have already raised a number of questions about what a WBD-Paramount combo would look like and the effect it could have on the larger TV and film landscape.

The first piece of the puzzle in any serious integration plans would be sorting out what’s to be done with WBD and Paramount’s U.S. cable networks, MoffettNathanson’s team of media analysts wrote in a research note Thursday, after news of the merger talks broke Wednesday afternoon.

“We think any regulatory review of a WBD/PARA combo would likely start with WBD’s domestic cable portfolio, which already accounts for a greater share of linear time viewed than that of any other company, even including broadcast networks,” the MoffettNathanson analysts write.

Warner Bros. Discovery is home to cable channels including Food Network, HGTV, TLC, TBS, TNT, Cartoon Network/Adult Swim, Discovery, Animal Planet, CNN, TCM, truTV, ID, OWN, among others, and co-owns Chip and Joanna Gaines’ Magnolia Network.

Paramount’s cable assets are BET (which it is said to be in talks to sell), Comedy Central, Nickelodeon, MTV, VH1, Paramount Network, CMT, along with a handful of smaller networks.

According to Nielsen data and MoffettNathanson’s analysis, Paramount’s cable networks as a whole rank second only to WBD’s in linear viewing time in most quarters. And together, the two companies would hold 35%-40% of linear television time viewed in the U.S., “a greater share than any single entity has controlled since the pre-cable network era and likely to be among the biggest sources of potential regulatory pushback.”

With the huge asterisk this is all very preliminary, sources within WBD say the likely resolution to this roadblock for a potential merger would be selling off a chunk of those Paramount cable channels and keeping Warner Bros. Discovery’s own larger portfolio, overseen by U.S. networks chief Kathleen Finch. Such potential sales would also lessen the blow to Warner Bros. Discovery’s existing elevated leverage.

And WBD is definitely more likely to prioritize its cable lineup, which it’s been using to promote other parts of the company, including recent large campaigns behind “Wonka,” “Barbie” and “Aquaman and the Lost Kingdom,” and constant plugs for streamer Max.

However, whatever WBD would choose to keep from Paramount’s offerings (Paramount Network is a solid choice, with those “Yellowstone” ratings, and Nickelodeon would give a serious boost to WBD’s kids demo on cable, and offer a huge children’s content library to stream on Max) could be well worth it, according to MoffettNathanson, which notes those combined cable assets, plus the move into broadcast with the inclusion of CBS, “would produce additional cost synergies and potential revenue (advertising or affiliate fees) synergies.”

But if WBD is looking for the most bang for their limited bucks, MoffettNathanson suggests another target: Fox.

“If WBD were really looking to make an acquisition, especially for a broadcast network, NFL and other must have sports rights, plus a leading FAST service in Tubi, 18.6% FanDuel option and even a studio lot, we think [Fox] would be a much better fit currently trading at a discount valuation and an easier deal to pull off (especially if Fox News ends up dealt to News Corp. in a side deal),” the media analysts write.

(Pictured above: Chip and Joanna Gaines on Magnolia Network, and MTV’s “Jersey Shore Family Vacation.”)


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