• WBD could use its international distribution footprint to boost Paramount's franchises, while Paramount's children's programing assets could be essential to WBD's long-term streaming ambitions.
• CBS News could be combined with CNN to create a global news powerhouse. CBS' crime dramas, such as "NCIS" and "Criminal Minds," could be combined with Investigation Discovery and TruTV.
Sources has reported in recent days that Redstone, after spending years holding her family’s empire together, had become open to offers for NAI and Paramount assets from suitors including Skydance and RedBird Capital.
Redstone was not in the room with Zaslav and Bakish for the actual meeting, a source noted. Redstone did have a separate conversation with Zaslav this week where the role of broadcast network CBS in any potential future deal was a major topic.
As a broadcast network coupled with 28 owned stations in many markets, CBS is a significant asset but also a legacy one. Given recent talk of Disney possibly parting with ABC and its stations (though the company recently said it has reconsidered) and other movement on the broadcast chess board, the notion of CBS and the stations not following the rest of the Paramount portfolio may be logical. Private equity funds have increasingly looked at local broadcasting as an area of interest.
Wall Street didn’t have any immediate reaction to the initial report of the negotiations by Axios. WBD stock slipped almost 6% during the regular trading day and was basically flat in after-hours trading. Paramount slid 2% and drifted down further after the session.
Warner Discovery would be prevented from entering into a transaction until the April expiration of a two-year lock-up period after the merger of WarnerMedia and Discovery. The lockup was agreed to as part of the Warner-Discovery deal, which was executed via a Reverse Morris Trust, which confers certain tax advantages. Many dealmakers had marked April 8 of next year given the likelihood of WBD wanting to make changes to its portfolio.
Word of the talks surfaced not long after Bloomberg reported that Paramount had also been discussing the potential sale of BET Media, which includes the BET and VH1 cable networks as well as studio and streaming operations. Potential buyers include Byron Allen and an investor group led by BET CEO Scott Mills and finance executive Shinh Chu of CC Capital Partners. Paramount had previously explored the sale of BET but had pulled it back after determining that the bids were too low.
Both WBD and Paramount face significant issues with debt as well as the hefty expenses required of anyone looking to compete in streaming. Since the April 2022 closing of WarnerMedia’s $43 billion merger with Discovery, investors had pointed to the company’s debt as a concern. It also combined a large swath of cable TV assets against a backdrop of accelerating rates of cord-cutting. Shares in the merged company have been trading well below the price as of the deal close. Similarly, Paramount’s reunion of CBS and Viacom has not gone over well on the Street, with the stock sinking to single digits earlier this year and remaining nearly two-thirds below its level at the close of the Viacom-CBS deal in 2019.
WBD and Paramount Global both declined to comment. A rep for National Amusements did not respond to a request for comment.
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