warner bros. discovery

Paramount ends Warner Bros. Discovery merger talks, continues mulling sell-off

max, paramount, streaming, Tech, warner bros. discovery / Shannon Garcia / February 29, 2024

Max and Paramount+ staying separate —

Report: Paramount still contemplating selling to Skydance Media.

Scharon Harding – Feb 28, 2024 9: 14 pm UTC

Warner Bros. Discovery (WBD) and Paramount Global are no longer considering a merger that would have put the Max and Paramount+ streaming services under one corporate umbrella. Per a CNBC report today citing anonymous “people familiar with the matter,” WBD and Paramount had been mulling a merger for “several months.”

In December, reports started swirling about WBD and Paramount discussing a potential merger. Axios even reported that WBD CEO David Zaslav and Paramount CEO Bob Bakish met in person for “several hours” and that Zaslav also met with Shari Redstone, the owner of National Amusements Inc. (NAI), Paramount’s parent company. Now, CNBC reports that discussions between the media giants “cooled off this month.” Paramount and WBD haven’t commented.

When news of the potential merger dropped, it was unclear what sort of regulatory hurdles the media conglomerates might have faced if they tried becoming one. Combined, the companies would have had the second-biggest streaming business by subscriber count, trailing Netflix.

Debt was also a huge concern. Paramount is $14.6 billion in debt, per its earnings report shared today. WBD was $40 billion in debt at the time of merger talks but said it was eyeing a profitable streaming business. WBD is still in debt currently but reported this month that its streaming business became profitable, making $103 million for the year. Max’s most recent subscriber count is 97.7 million compared to 67.5 million for Paramount+.

Merging with Paramount would have meant WBD added another company with struggling legacy media assets to its portfolio. It also would have meant buying a streaming service that has yet to turn a profit as of this writing. Paramount’s streaming business lost $1.66 billion in 2023, it reported today.

Merger still possible

Although things with WBD reportedly didn’t work out, Paramount is still seriously considering a merger. CNBC reported that the company formed a committee and hired a financial adviser focused on analyzing potential bids for all or parts of the company.

Suitors recently tied to Paramount include Byron Allen and, reportedly, Skydance Media. The David Ellison-owned company is “still performing due diligence on a potential transaction,” CNBC said today, citing two of its anonymous sources. In January, Bloomberg reported that Skydance made an all-cash offer for NAI.

Paramount could also try to bundle its services with another company’s, which could attract subscribers to Paramount+ and help Paramount save money. It has already considered bundling Paramount+ with Comcast’s Peacock through a partnership or joint venture, The Wall Street Journal (WSJ) reported earlier this month. But Comcast doesn’t want to buy Paramount, per one of CNBC’s anonymous sources from today’s report.

Some streaming rivals to Paramount+ are already bundled together (such as Disney’s Disney+ and Hulu) and exploring joint ventures. As streaming services race to achieve the sort of profitability that Netflix has, big strategic moves, such as mergers, partnerships, and price hikes, are expected soon. Meanwhile, subscribers remain worried about potential fallout, which could result in monopolistic practices that limit consumer options.

This article was updated to include information from Paramount’s latest earnings report.

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Does Fubo’s antitrust lawsuit against ESPN, Fox, and WBD stand a chance?

antitrust, Disney, Fox, lawsuits, Policy, sports, streaming, Tech, warner bros. discovery / DJ Henderson / February 23, 2024

Collaborating conglomerates —

Fubo: Media giants’ anticompetitive tactics already killed PS Vue, other streamers.

Scharon Harding – Feb 22, 2024 5: 56 pm UTC

Fubo is suing Fox Corporation, The Walt Disney Company, and Warner Bros. Discovery (WBD) over their plans to launch a unified sports streaming app. Fubo, a live sports streaming service that has business relationships with the three companies, claims the firms have engaged in anticompetitive practices for years, leading to higher prices for consumers.

In an attempt to understand how much potential the allegations have to derail the app’s launch, Ars Technica read the 73-page sealed complaint and sought opinions from some antitrust experts. While some of Fubo’s allegations could be hard to prove, Fubo isn’t the only one concerned about the joint app’s potential to make it hard for streaming services to compete fairly.

Fubo wants to kill ESPN, Fox, and WBD’s joint sports app

Earlier this month, Disney, which owns ESPN, WBD (whose sports channels include TBS and TNT), and Fox, which owns Fox broadcast stations and Fox Sports channels like FS1, announced plans to launch an equally owned live sports streaming app this fall. Pricing hasn’t been confirmed but is expected to be in the $30-to-$50-per-month range. Fubo, for comparison, starts at $80 per month for English-language channels.

Via a lawsuit filed on Tuesday in US District Court for the Southern District of New York, Fubo is seeking an injunction against the app and joint venture (JV), a jury trial, and damages for an unspecified figure. There have been reports that Fubo was suing the three companies for $1 billion, but a Fubo spokesperson confirmed to Ars that this figure is incorrect.

“Insurmountable barriers”

Fubo, which was founded in 2015, is arguing that the three companies’ proposed app will result in higher prices for live sports streaming customers.

The New York City-headquartered company claims the collaboration would preclude other distributors of live sports content, like Fubo, from competing fairly. The lawsuit also claims that distributors like Fubo would see higher prices and worse agreements associated with licensing sports content due to the JV, which could even stop licensing critical sports content to companies like Fubo. Fubo’s lawsuit says that “once they have combined forces, Defendants’ incentive to exclude Fubo and other rivals will only increase.”

Disney, Fox, and WBD haven’t disclosed specifics about how their JV will impact how they license the rights to sports events to companies outside of their JV; however, they have claimed that they will license their respective entities to the JV on a non-exclusive basis.

That statement doesn’t specify, though, if the companies will try to bundle content together forcibly,

“If the three firms get together and say, ‘We’re no longer going to provide to you these streams for resale separately. You must buy a bundle as a condition of getting any of them,’ that would … be an anti-competitive bundle that can be challenged under antitrust law,” Hal Singer, an economics professor at The University of Utah and managing director at Econ One, told Ars.

Lee Hepner, counsel at the American Economic Liberties Project, shared similar concerns about the JV with Ars:

Joint ventures raise the same concerns as mergers when the effect is to shut out competitors and gain power to raise prices and reduce quality. Sports streaming is an extremely lucrative market, and a joint venture between these three powerhouses will foreclose the ability of rivals like Fubo to compete on fair terms.

Fubo’s lawsuit cites research from Citi, finding that, combined, ESPN (26.8 percent), Fox (17.3 percent), and WBD (9.9 percent) own 54 percent of the US sports rights market.

In a statement, Fubo co-founder and CEO David Gandler said the three companies “are erecting insurmountable barriers that will effectively block any new competitors” and will leave sports streamers without options.

The US Department of Justice is reportedly eyeing the JV for an antitrust review and plans to look at the finalized terms, according to a February 15 Bloomberg report citing two anonymous “people familiar with the process.”

Does Fubo’s antitrust lawsuit against ESPN, Fox, and WBD stand a chance? Read More »

Debt-laden Warner Bros. Discovery and Paramount consider merger

culture, max, movies, paramount, paramount plus, streaming, Tech, TV, warner bros. discovery / DJ Henderson / December 21, 2023

Game of Thrones — Enlarge / Media firms are looking for allies to help them take the coveted media throne.

The CEOs of Warner Bros. Discovery (WBD) and Paramount Global discussed a potential merger on Tuesday, according to a report from Axios citing “multiple” anonymous sources. No formal talks are underway yet, according to The Wall Street Journal. But the discussions look like the start of consolidation discussions for the media industry during a tumultuous time of forced evolution.

On Wednesday, Axios reported that WBD head David Zaslav and Paramount head Bob Bakish met in Paramount’s New York City headquarters for “several hours.”

Zaslav and Shari Redstone, owner of Paramount’s parent company National Amusements Inc (NAI), have also spoken, Axios claimed.

One of the publication’s sources said a WBD acquisition of NAI, rather than only Paramount Global, is possible.

Talks to unite the likes of Paramount’s film studio, Paramount+ streaming service, and TV networks (including CBS, BET, Nickelodeon, and Showtime) with WBD’s Max streaming service, CNN, Cinemax, and DC Comics properties are reportedly just talks, but Axios said WBD “hired bankers to explore the deal.”

It’s worth noting that WBD will suffer a big tax hit if it engages in merger and acquisition activity before April 8 due to a tax formality related to Discovery’s merger with WarnerMedia (which formed Warner Bros. Discovery) in 2022.

A union of debts

Besides the reported talks being in very early stages, there are reasons to be skeptical about a WBD and Paramount merger. The biggest one? Debt.

The New York Times notes that WBD has $40 billion in debt and $5 billion in free cash flow. Paramount, meanwhile, has $15 billion in debt and a negative cash flow. Zaslav has grown infamous for slashing titles and even enacting layoffs to save costs. But WBD is eyeing greener pastures and declared Max as “getting slightly profitable” in October. Adding more debt to WBD’s plate could be viewed as a step backward.

Additionally, Paramount is even more connected to old, flailing forms of media than WBD, as noted by The Information, which pointed to two-thirds of Paramount’s revenue coming from traditional TV networks.

Antitrust concerns could also impact such a deal.

WBD stocks closed down 5.7 percent, and Paramount’s closed down 2 percent after Axios’ report broke.

Of course, these details about a potential merger may have been reported because WBD and/or Paramount want us to know about it so that they can gauge market reaction and/or entice other media companies to discuss potential deals.

Debt-laden Warner Bros. Discovery and Paramount consider merger Read More »