David Ellison just showed he’s serious about challenging Netflix and Disney for the Hollywood crown — and he’s moving at lightning speed.
The media mogul and his new company, Paramount Skydance, are preparing a bid for rival Warner Bros. Discovery, The Wall Street Journal reported on Thursday. Business Insider couldn’t independently confirm the report. WBD declined to comment, and Paramount didn’t respond to requests for comments.
The news sent waves through the media industry, in part because of how quickly Ellison seems to be moving to consolidate power. As a reminder, the deal that combined his company, Skydance, with Paramount closed just last month. It helps that Ellison has the financial backing of his father, Larry Ellison, who briefly surpassed Elon Musk as the world’s richest person this week.
WBD had planned to split into two companies, Warner Bros. and Discovery Global, next year. Paramount is preparing a majority cash bid for the whole company, backed by the Ellison family, the WSJ reported.
Together, Paramount and Warner Bros. Discovery — which owns assets like the Warner Bros. film and TV studios and the HBO Max streaming service — would create a Hollywood titan.
“There’s absolutely no doubt that a combination of these two companies would result in the deepest roster of blockbuster franchise IP in all of Hollywood,” said Brandon Katz, the insights and content strategy director at entertainment data provider Greenlight Analytics.
It would also give Ellison a host of cable TV networks like CNN and some additional sports rights, and create potential antitrust scrutiny.
Such a merger would make it clear that Ellison wants to compete with the industry leaders, not just shepherd Paramount into the streaming era. Before this news, Ellison had already hinted at grander ambitions, signing a $7.7 billion UFC deal less than a week after the Paramount-Skydance deal closed.
Even with the merger, competing with Netflix and Disney would be an uphill battle. Paramount+ and HBO Max combined would have ranked fifth among streaming services in watchtime on US connected TVs in July, according to Nielsen — behind YouTube, Netflix, Disney+ with Hulu, and Amazon Prime Video.
“A mash-up of both streaming services would require a very expensive and long technological revamp that isn’t guaranteed to spur subscriber growth and slow churn,” Katz said.
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Still, Wall Street is thrilled with the potential combination. On Thursday afternoon, WBD’s stock soared as much as 37%, while Paramount shares spiked more than 10%.
One reason: potential cost savings. A marriage between two major studios would lead to efficiencies, likely including major layoffs. For Hollywood’s creative community, it would mean one fewer buyer, further consolidating Tinseltown.
“There’s one less green light place in town, which puts pressure on the agents and managers,” an advisor close to both companies said. But that one company would also have a lot of money to spend, this person added.
On Wednesday at a Goldmach Sachs media conference, WBD CEO David Zaslav predicted the streaming landscape would “rationalize” further, leaving just a few superpowers remaining.
“Right now, there’s only five global players: there’s Amazon, Netflix, Disney, us, and YouTube,” Zaslav said.
He didn’t mention Paramount. With such a deal, Ellison would show he’s committed to being one of the entertainment giants left standing.
