Potential Paramount-Warner Bros. Merger Could Reshape Streaming Landscape

The Hollywood rumor mill is buzzing with the potential merger between Paramount and Warner Bros. Discovery, as Warner Bros. has confirmed it is seeking a buyer. Paramount Skydance is reportedly leading the charge, while other major players like Comcast, Netflix, and Amazon are also considering their options.

If a merger occurs, it would represent the largest industry consolidation since Disney acquired 20th Century Fox in 2019. A key question arising from this possible merger is the fate of both Paramount+ and HBO Max, the streaming services at the core of this deal.

Reports suggest that David Ellison, CEO of Paramount Skydance, might merge HBO Max into Paramount+. According to Cristofer Hamilton, industry insight manager at Parrot Analytics, the demand for content relative to its cost indicates that Paramount+ is currently a better value compared to HBO Max, which has seen price increases recently.

HBO Max's basic ad-supported plan is priced at $10.99 per month, while its ad-free tier is now $20.99. In contrast, Paramount+ offers its ad-supported plan at $7.99 and its ad-free tier at $12.99. Hamilton estimates that a combined service could be competitively priced around $21 per month, potentially creating a 'super streamer.' Media analyst Crystal Gorges notes that the combined libraries of these two platforms could pose a serious challenge to competitors like Netflix and Disney+.

However, she warns that they would face tough competition, as audience demand for the Disney+/Hulu library currently outpaces that of HBO Max and Paramount+ together. Gorges highlights the contrasting appeal of the two platforms, with Paramount+ focusing on populist hits like SpongeBob SquarePants and Yellowstone, while HBO Max leans into prestige content with shows like The Last of Us and Succession.

Analyst Sam Khoury from Ampere Analysis suggests that a short-term bundling strategy might be effective, depending on market resonance for each brand. The situation is complicated by the impending departure of Taylor Sheridan, a key creator behind many of Paramount+'s top shows, who will join NBCUniversal in 2028.

Sheridan's work has generated significant revenue for Paramount+ and has been pivotal in shaping the platform's identity. Even if a merger is finalized, analysts caution that it will not immediately transform the streaming landscape due to the complexities of merging two large entities and their associated debts.

Despite the potential for a media powerhouse, significant challenges remain in integrating the two companies and navigating the competitive streaming landscape.