Big Deal: Warner Bros. Discovery Reportedly in Merger Talks With Paramount

In a deal that would shake up the media business, Warner Bros. Discovery CEO David Zaslav has reportedly discussed a possible merger with Paramount Global.

Both companies are loaded with debt and struggling to keep up with the leaders in the streaming race.

Zaslav met with Paramount CEO Bob Bakish on Tuesday at Paramount headquarters in New York, according to Axios. The meeting reportedly lasted several hours.

Zaslav has also had conversations with Shari Redstone, who controls Paramount through her family holding company, National Amusements.

Paramount has already been mentioned as a takeover candidate, with reports that Skydance Media and RedBird Capital have been kicking the tires on Paramount. The report of the interest in Paramount sent Paramount shares up 12% earlier this month.

Skydance and Redbird would be likely to sell off parts of Paramount and focus on its movie and TV studio business.

A group led by the CEO of Paramount’s BET business is also reportedly in talks to buy the unit.

Warner Bros. Discovery might have a different approach, using Paramount’s assets to buttress its own units, including its Max streaming service, CNN and WBD Sports.

Because WBD does not own a broadcast network or television stations, there is some thinking that the deal might be able to pass regulatory reviews. Paramount owns broadcast network CBS and some 28 TV stations, both CBS affiliates and independents, through its CBS Stations unit.

However, WBD can't make a big deal till April because of the reverse Morris trust it set up to reduce taxes when Discovery acquired WarnerMedia from AT&T.

Zaslav assembled Warner Bros. Discovery starting out as CEO of Discovery Communications, a smaller cable networks company. Discovery acquired Scripps Networks Interactive and then WarnerMedia.

Acquiring WarnerMedia from AT&T left WBD with a big debt load that the company has been reducing through cost-cutting. It still has about $43 billion in debt.

WBD shares were down more than 5% in after-hours trading on Wednesday.  Paramount was down 2% after hours.

None of the companies involved would comment.