Two of the world’s biggest film and TV studios, Warner Brothers and Paramount, are in talks to merge to take on rivals such as Netflix and Disney.
David Zaslav, the head of Warner, met Paramount chief executive Bob Bakish in New York this week to discuss a tie-up, according to reports.
While the discussions are thought to only have been an expression of interest, a merger would create a media titan worth nearly £30billion.
Among its brands, Warner controls HBO, the studio behind hits such as Succession and Game of Thrones, and streaming service Max. It also owns news network CNN, the Discovery Channel and Eurosport.
Paramount owns Channel 5 in the UK and the CBS network, MTV and Nickelodeon.
Stars: Paramount’s film studio produced Top Gun: Maverick, starring Tom Cruise (right) while Warner Brothers scored a hit with Succession, starring Sarah Snook (left)
Its film studio Paramount produced Top Gun: Maverick, starring Tom Cruise. And its streaming service Paramount Plus, launched in 2021, carries series such as Yellowstone, starring Kevin Costner.
The two are among the five largest film and TV production studios in Hollywood, with the others being Disney, Sony Pictures and Universal, owned by Comcast.
The discussions come amid a costly streaming war, with billions of pounds being poured into productions to lure subscribers from established players, including Netflix and Amazon Prime.
But the costs hit profits, with Paramount and Disney planning cuts to offset streaming losses.
Max has around 95m subscribers and Paramount Plus 63m – well short of the nearly 250m garnered by Netflix.
Both sides would have to work out how to manage hefty debt piles. Warner’s debt was £34billion at the end of September while Paramount owes £11billion.
And they would have to decide what to do with their cable TV networks, which are under pressure as streaming services divert customers from traditional programming.
The companies are also exposed to a decline in TV advertising as firms focus on online marketing.
AJ Bell investment director Russ Mould said the issues were likely to create ‘nervousness’ around a merger.
‘While Warner Bros Discovery has been cutting costs and reducing leverage, Paramount’s balance sheet is under real strain,’ he said.
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