Could Max and Paramount+ Merge? Warner Bros. Discovery Open to Exploring Paramount Streaming Joint Venture

Could Max and Paramount+ Merge? Warner Bros. Discovery Open to Exploring Paramount Streaming Joint Venture

Warner Bros. Discovery has indicated early interest in exploring a partnership with Paramount Global to combine WBD's Max and Paramount+, according to sources.

Paramount Global, after its controlling shareholder Shari Redstone scrapped merger talks with Skydance Media last month, is proceeding under a new strategic plan under three co-CEOs to slash costs, explore the sale of certain assets and accelerate the profitability of Paramount+ in a possible joint venture with another player.

One potential streaming dance partner for Paramount is Warner Bros. Discovery. A source confirmed WBD's preliminary interest in a potential streaming JV with Paramount Global, as first reported by CNBC.

Of course, it's not a surprise that Warner Bros. Discovery would at least look into the feasibility of a streaming JV with Paramount, given how public Paramount Global's leadership team has been about their desire to land a partner. At this point, it's more or less both companies kicking the tires on what such a partnership could look like.

Reps for Warner Bros. Discovery and Paramount Global declined to comment.

At the June 25 employee town hall meeting, Chris McCarthy, one of the members of the three-headed Office of the CEO (and CEO of Showtime/MTV Entertainment Studios and Paramount Media Networks), discussed two potential streaming partners.

The first option "is to enter a deep, long-term relationship with a leading technology platform, which already has the full scale that we are trying to obtain. But what they don't have is our scale of content and together we will make for a very powerful combination to drive more minutes and greater profits," McCarthy told employees at the town hall. "And this would allow us to focus a greater percent of our budget on the things we do best - that's making hit content."

The second type of partnership Paramount Global is exploring "involves us joining forces with one or more other SVOD players," McCarthy said. "The sheer volume of hit content that we could offer together would be tremendous across TV, film and sports and would attract millions of viewers. Plus, we would share in all other non-content expenses."

McCarthy said "the great news is there is tremendous interest in partnering with us across both of these strategic options, given the strength of our content, the volume of our hits, and our industry-leading track record."

Separately, at a recent investment conference, Warner Bros. Discovery CEO David Zaslav said the company will be "opportunistic" in seeking M&A deals in the next two or three years. "There are a lot of players that are losing a lot of money," Zaslav said May 30 at the Bernstein 40th Annual Strategic Decisions Conference. "There'll be some players that want to get out of the business, that will look to consolidate their streaming businesses with others," he said, adding that he believes there will be 4-5 dominant global streaming platforms as things shake out.

Paramount earlier this year discussed merging Paramount+ with NBCUniversal's Peacock in the past, but so far nothing has transpired on that front. Meanwhile, late last year, Zaslav and Bob Bakish (then CEO of Paramount) briefly discussed the idea of merging WBD and Paramount Global but those talks did not go anywhere.

Both Paramount+ and Max have announced price hikes in the last few weeks as both companies are keen on proving to Wall Street their streaming businesses can be profitable growth engines.

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