Paramount Skydance is looking to expand further, as it prepares an offer to purchase Warner Bros. Discovery. According to The Wall Street Journal, the newly merged Paramount is working with an investment bank to place a majority cash bid for WBD.
However, Paramount did not immediately send an offer this week to its fellow media corporation. Paramount may instead place the bid as early as next week, CNBC also reported.
WBD’s shares closed yesterday at $16.15, which was an 28% increase, making it the stock’s best day ever. The stock rose after the WSJ initially shared the news about Paramount preparing its takeover bid.
The news comes after WBD recently announced its decision to separate its global television networks business from its streaming business and studios.
WBD CEO David Zaslav stated at an investor conference earlier this week that the planned separation would likely be completed by April. The streaming and studio assets will be renamed Warner Bros. The global TV networks business will be rebranded as Discovery Global. The television business will include multiple pay TV networks, including TNT and CNN.
WBD executives said in June that each company would be able to make their own deals after the split. But if Paramount places a bid to buy WBD before its separation, the offer would have to be for the entire company.
The media industry has been undergoing a major transformation over the past decade as streaming services have changed the pay TV bundle. A merger between Paramount and WBD would continue that change. The takeover would create a media giant with a huge portfolio of pay TV networks, sports rights and two major film studios.
Paramount owns broadcast network CBS, as well as such pay TV networks as BET, MTV and Nickelodeon. The company also operates streaming service Paramount+. Its film studio has released such movies as The Godfather, Top Gun and Forrest Gump.
WBD has similar assets, with the exception of a broadcast television network. The company’s growth in assets came as a result of its own merger in 2022 between WarnerMedia and Discovery.
The newer company owns such cable television networks as CNN and TNT, as well as HBO and streaming service Max. Its Warner Bros. film studio also has several acclaimed franchises, including Harry Potter and The Lord of the Rings.
Both Paramound and WBD have multiple major sports rights for all traditional TV and streaming platforms. A merger would put the NFL, MLB and college football and basketball, as well as other major sports, under one company.
Media executives and experts have long expected companies like Paramount and WBD to consolidate. Zaslav has said publicly that media companies need to consolidate. Zaslav said during an earnings call shortly after Donald Trump was elected into his second term as president that a new administration could usher in more dealmaking.
However, in recent months, some media companies have moved toward separation. Last year, for instance, Comcast announced that its NBCUniversal would spin off its pay TV networks, such as CNBC and MSNBC, into a separate, publicly traded entity. Months later, WBD also announced it would make a similar move.
The $8 billion merger deal for Paramount Skydance was announced last year. It received regulatory approval last month to move forward after a lengthy delay.
The Federal Communications Commission (FCC) helped the merger to move forward weeks after Paramount agreed to pay $16 million to Trump. The payout was issued to settle a lawsuit he filed against the company over the editing of an interview on CBS’s 60 Minutes with former Vice President Kamala Harris.
FCC Chairman Brendan Carr released a statement after the deal was approved. He said he welcomed “Skydance’s commitment to make significant changes at the once storied CBS broadcast network.”
The company is looking to cut more than $2 billion in costs. According to predictions, it is expected that layoffs will continue. Paramount sent a memo to its employees last week. The memo stated the workers must return to the office five days a week in the new year, or seek a buyout.
RedBird Capital Partners backed the merger, which has led to several changes. The company has implemented several deals under the direction of Skydance Media owner David Ellison. Those deals include acquiring the U.S. rights to TKO Group’s UFC for seven years, which will begin next year.
Ellison is s the son of Oracle founder and multibillionaire Larry Ellison. The latter became more than $100 billion richer on Wednesday. His wealth increased after Oracle issued growth projections that dramatically lifted the company’s stock. As a result, be became the wealthiest person in the world with a net worth of $393 billion.
Warner Bros. Pictures currently has a market cap of $33 billion. That amount is double that of market cap of Paramount Skydance.
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