Paramount is hunting for a streaming partner, could kick off a wave of deals

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Paramount Global is holding talks with other entertainment companies about merging its Paramount+ streaming service with an existing platform. If it reaches a deal, it may kick off a new wave of streaming partnerships that could put the entire media industry on firmer footing. Paramount Global leadership is having active discussions with other media and tech company executives to determine if a structure makes sense for both parties where Paramount+ can be merged with another streaming entity and potentially co-owned, according to people familiar with the matter, who asked not to be named because the discussions are private. One of the companies that has expressed a desire to reach a deal is Warner Bros. Discovery , according to people familiar with the matter. Combining Max and Paramount+ could strengthen both services by allowing them to better compete with Netflix and Disney's suite of platforms (Disney+, Hulu and ESPN) for eyeballs and future content. Warner Bros. Discovery held preliminary merger talks for a deal for all of Paramount Global earlier this year, but talks didn't escalate. Paramount Global is also considering partnering with a technology platform, the company's co-CEO Chris McCarthy said at an employee town hall on June 25. "What they don't have is our scale of content, and together we will make for a very powerful combination to drive more minutes and greater profits," McCarthy said of a potential tech partner at the town hall, according to a transcript of the event obtained by CNBC. A merged streaming service would mitigate churn by giving customers more diverse programming and fewer reasons to cancel each month, and it could take Paramount+ losses off Paramount Global's balance sheet by giving it new ownership. While a structure for a hypothetical joint venture with Warner Bros. Discovery hasn't been discussed in detail, ownership likely wouldn't be a 50-50 split given the existing natures of the streaming assets and their finances, according to people familiar with the discussions. Warner Bros. Discovery's direct-to-consumer business made $103 million in annual adjusted EBITDA in 2023 after losing $2.1 billion the year before. Paramount Global reported a loss of $1.67 billion in direct-to-consumer operating income before depreciation and amortization in 2023, narrower than its $1.8 billion loss a year prior. Max has about 100 million global subscribers, with 52.7 million based in the U.S. Paramount+ ended its first quarter with 71 million subscribers. Comcast's NBCUniversal has also expressed interest in a joint venture with Paramount+, as The Wall Street Journal first reported earlier this year. The talks didn't progress and never got particularly far, according to people familiar with the matter. "The sheer volume of hit content that we could offer together would be tremendous across TV, film and sports, and would attract millions of viewers," McCarthy said during the town hall in reference to a potential partnership with an existing subscription streaming service like Max or Peacock. "Plus, we would share in all other non-content expenses." Spokespeople for Warner Bros. Discovery, NBCUniversal and Paramount Global declined to comment.