‘Warnamount’ Merger Talk Confounds Investors And Industry: “Why Would Any Company Try To Catch A Falling Knife?”
21.12.2023 - 17:33
/ deadline.com
Old habits die hard. So Warner Bros. Discovery’s CEO David Zaslav just sat down with Paramount Global chief executive Bob Bakish to talk about merging, and the media business yet again confronted the possibility of a spasm of mega-deals reshaping the landscape.
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When the opening bell rang on Wall Street, however, investors didn’t exactly give the idea of “Warnamount” a ringing endorsement. Shares of Paramount slipped 1% and WBD slid 4% in early trading. Paramount is 40% below its 52-week high, and WBD has lost more than half its value since the April 2022 close of the WarnerMedia-Discovery merger.
While the business has reckoned with more seismic deals in recent years, among them Disney-Fox and AT&T-Time Warner, this time the reality seems to be dawning that bigger is not always better. Streaming platforms swim in red ink and legacy media assets (mainly linear TV) are eroding. Yes, Zaslav has hinted at opportunities to be had, but WBD was not really considered a buyer given its oft-stated focus on reducing its enormous debt. It’s not clear how trying to swallow a company with hefty debt of its own solves any problems.
Citi media analyst Jason Bazinet told Deadline he sees little upside to the combination. Investors “watched CBS and Viacom merge,” he said. “They watched Disney and Fox merge. And they watched Discovery buy Scripps and [merge] with Warner Bros. Discovery. And none of those were the elixir that allowed you to generate huge amounts of cash flow.” A company message of “‘We have this great idea, we need to do more M&A,’” he said, won’t go over as well as it once did, “because you can’t draw a straight line between M&A and profitability in streaming.”
Robert Fishman, an analyst with
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