Just weeks after Skydance Media completed its acquisition of Paramount Global, the new company is reportedly preparing a majority cash bid to acquire Warner Bros. Discovery (WBD) in its entirety, including its cable networks and movie studio.
A Skydance-Warner combination could reshape the global entertainment landscape. Backed by Paramount Skydance CEO David Ellison’s substantial family financial resources, the potential combination would represent significant consolidation in the media industry and is likely to face regulatory scrutiny. The deal’s economics, however, offer compelling benefits that regulators should consider.
The Economic Imperative for Media Consolidation
The media industry faces profound disruption. Traditional broadcasters contend with declining linear TV viewership, escalating content costs, and fragmented audiences—due largely to the proliferation of streaming services. Warner Bros. Discovery carries a substantial debt load of approximately $35 billion, a remnant of the 2022 merger that brought together WarnerMedia and Discovery. This financial pressure has led to significant programming cuts and layoffs.
In response to these market pressures, WBD announced plans to restructure by mid-2026, splitting into two publicly traded companies: one focused on streaming and studios, to be named “Warner Bros.,” and another for its legacy cable-TV business, “Discovery Global.”
This proposed split aims to allow the growth-oriented streaming and studio segment to operate with a cleaner balance sheet, separate from the declining cable business and its debt burden. David Ellison’s bid for the entire company before this split appears to be a strategic maneuver to acquire both growth assets and the still-generating-cash-flow cable networks, preventing a potential bidding war for the more attractive studio and streaming operations.
Regulatory Hurdles
Antitrust regulators—likely the U.S. Justice Department (DOJ)—would examine the deal for potential market-concentration risks. Combining two of the major legacy Hollywood studios and their streaming services, HBO Max and Paramount+, could reduce competition in film and television content production. Moreover, combining Paramount and WBD’s cable properties could give them significant leverage in channel package negotiations with multichannel video programming distributors like Comcast, Spectrum, DirecTV, and Dish Network.
Robert Weissman, co-president of Public Citizen, contends that any attempt by Paramount to acquire WBD “should plainly be struck down” on antitrust grounds, citing concerns about a Trump administration potentially approving the merger to advance its ideological agenda.
Even combined, however, the company’s streaming services would remain smaller than Netflix, which boasts over 300 million subscribers. Moreover, the two services account for less than 3.5% of household viewing time, according to Nielsen. In contrast, YouTube accounts for more than 13% of viewing time and Netflix accounts for just under 9%.
Another concern involves placing influential news networks, specifically CNN and CBS News, under a single corporate umbrella. Former President Donald Trump has frequently criticized CNN, referring to it as “fake news.”
The Trump administration’s approach to media mergers has demonstrated a focus on political factors, in addition to economic ones. For example, the Federal Communications Commission (FCC), led by Trump appointee Brendan Carr, approved Skydance’s merger with Paramount only after David Ellison agreed to appoint an ombudsman for CBS News and eliminate diversity, equity, and inclusion (DEI) initiatives.
It is possible that these recent concessions and the political alignment of Ellison’s father—Oracle Corp. co-founder Larry Ellison, a known Trump supporter and friend—might affect the regulatory outcome. Even so, regulators could still mandate divestitures of overlapping linear TV networks to mitigate market concentration. For instance, a combined entity might face pressure to divest some of its cable channels.
Economic Rationale for Approval
Despite potential hurdles, approving the Paramount Skydance-Warner Bros. Discovery combination would offer economic benefits for consumers, creators, talent, and the entertainment industry overall.
A merged entity would create an entertainment powerhouse with a vast content library, including popular franchises such as DC Comics, Harry Potter, Barbie, HBO, CNN, CBS, MTV, Top Gun, Mission: Impossible, and Star Trek. This expanded content offering could enable bundled streaming services, potentially leading to cost savings and a more comprehensive entertainment value for consumers.
Mike Proulx, an analyst at Forrester Research, suggests the deal could “redefine the streaming landscape,” potentially leading to consumer cost savings. David Ellison’s vision for Paramount+ involves enhancing algorithmic recommendations and advertising technology, which a larger combined entity would have greater resources to implement, thereby improving the user experience. A more robust competitor with expanded scale could also drive innovation and improve service quality across the streaming market, offering vibrant competition against the streaming giants.
A financially strong combined media company, particularly with the backing of the Ellison family’s wealth, offers a more stable platform for content creation and investment in premium productions. Ellison’s expressed approach favors “creativity first” and aims to be the “first stop for best-in-class storytellers,” as demonstrated by Paramount’s recent large investments in UFC media rights and “South Park” streaming rights. This could translate into more opportunities and better terms for creative talent. For its part, WBD’s focus on theatrical releases has shown strong box-office results, suggesting a commitment to traditional filmmaking avenues that benefit creators and talent.
The proposed merger addresses the critical need for scale in a consolidating media market. By acquiring WBD in its entirety before its planned split, Paramount Skydance aims to maintain an integrated studio system, preventing the fragmentation of valuable assets.
The planned pursuit of $2 billion in cost efficiencies and synergies previously announced at Paramount Skydance—as well as likely layoffs—reflects a rationalization strategy necessary for financial health in a competitive environment. Paramount Skydance’s bid for Warner Bros. Discovery is similarly a response to structural shifts in the industry, where large-scale consolidation may be a condition for survival, rather than a threat to competition, especially given the entry of large technology companies into content production.
While regulatory scrutiny is a necessary component of this process, the economics indicate that the deal can yield significant benefits. By creating a larger, more financially robust entity, the merger would promote healthier competition against dominant tech platforms, offer consumers broader content choices and improved services, and provide a more stable and resource-rich environment for creators and talent.
Regulators should evaluate the proposed acquisition with a view that acknowledges these industry dynamics and recognizes that strategic consolidation can strengthen the entertainment sector and foster innovation. Approving this merger, potentially with carefully tailored divestitures of overlapping linear assets, would facilitate a more sustainable and competitive media industry overall.
