Paramount Skydance launched a $108.4 billion hostile bid for Warner Bros. Discovery, defying a rival bid from Netflix and injecting uncertainty into the future of the storied Hollywood media company.
Since 2000, the parent company of the Warner Bros. film studio has gone through three major reorganizations. Now the company faces its fourth restructuring.
Here are four charts that show why the deal involving Warner Bros Discovery matters:
To better compete with Disney
If Paramount succeeds in acquiring Warner Bros. Discovery, the combined company would surpass market leader Disney in US and Canadian box office market share.
While Disney+ remains a major contender in the streaming space, with a global monthly active user share of the app at 15%, it lags slightly behind in individual user engagement metrics compared to Netflix and HBO Max, according to market intelligence firm Sensor Tower.
The potential purchase will also bolster Paramount’s content offering with HBO Max’s critically acclaimed shows, ranging from “Game of Thrones” and “Succession” to prestigious classic titles like “The Wire” and “The Sopranos.”
YouTube gaining market share
Alphabet’s YouTube dominates other streaming platforms, with the largest total screen share. It benefits from a combination of user-generated content, advertising revenue and live services.
The video streaming service said in March that it had more than 125 million paid subscribers, although those figures include users who are signed up for temporary free trials.
Additional information: Netflix’s purchase of Warner Bros. Discovery writes a new chapter in the checkered history of mergers
YouTube has about 2.9 billion monthly active mobile app users globally in the current quarter, surpassing the combined MAUs of major streaming services including Netflix, Disney+, HBO Max, Paramount+ and Peacock, according to Sensor Tower.
In October, YouTube led streaming in the United States with a 12.9% audience share, followed by Netflix with an 8% share, according to Nielsen data.
A defining moment for Hollywood
Shares of Warner Bros. Discovery closed up more than 4% on Monday, as the sale of the company would be one of the most momentous moments in the transformation of the media industry.
With a market value of more than $60 billion, the company’s shares have more than doubled since reports of Paramount’s interest emerged in early September.
“Paramount and Netflix are among the world’s largest content investors. There will be significant concentration in content spending if either of them buys WBD. Paramount has more direct overlap due to theatrical releases, but the magnitude of each bidder’s content spending could raise antitrust concerns, said eMarketer analyst Ross Benes.
Debt
Warner Bros. Discovery has approximately $35 billion in debt, meaning any deal will carry a significant burden. The company had previously rejected offers from Paramount, before the David Ellison-led company escalated to a hostile takeover bid.
In 2022, the merger of WarnerMedia and Discovery resulted in a significant debt load, which has slowed the company’s long-term strategic initiatives.
Under their potential deals, Paramount is expected to assume about $30 billion of debt from Warner Bros. Discovery, while Netflix would assume about $10 billion of debt.
With information from Reuters
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