The proposed merger of Paramount Skydance Global with Warner Bros. Discovery is being framed through the usual lenses—debt loads, political sensitivities, and regulatory scrutiny in the U.S. and Europe. But the real story is simpler and more strategic: this is a scale play built around intellectual property.
If approved, the $111 billion deal would unite two major Hollywood studios and one of the deepest content libraries in the industry.
“For all the regulatory noise, this deal ultimately comes back to the fundamentals of the entertainment business,” says Ed Barton, Research Director at Caretta Research. “Control of premium IP, global distribution, maximise engagement and build scale that compounds.”
Paramount’s franchises (Star Trek, Mission: Impossible, Transformers, and SpongeBob SquarePants among them) combined with HBO’s premium positioning create a formidable global streaming proposition.
“A supercharged Max platform (bolstered by Paramount IP) would immediately become a more credible challenger to Netflix — not necessarily in raw scale on day one, but in depth and variety of monetizable franchises,” says Barton. “And while Netflix loses access to Warner Bros. IP in this scenario, it is far from vulnerable. It remains the most effective company in the market at monetising IP at global scale.”
Media analyst Paolo Pescatore agrees that Netflix is no loser. “The practical outcome is Paramount becomes the clear front-runner, while Netflix takes the termination economics and keeps its powder dry. Netflix is prioritising capital discipline over scale at any price. On this basis, it’s a really smart move.”
Paramount hasn’t yet clarified whether it plans to run HBO as a separate entity or integrate it into Paramount+. There are existing distribution and licensing deals in place, so consumers likely won’t see immediate changes.
Guy Petty, the Founder of Fulcrum Media and a former Paramount executive says Paramount will need time to figure out exactly what it wants to do with assets like HBO.
“I believe they’ll keep both major brands alive. HBO is an extremely strong brand, and Paramount is as well. Paramount has made solid progress with its streaming services, so it probably makes sense to maintain both platforms rather than consolidate them too quickly,” he told BBC Radio 4.
A combined HBO/HBO+ (120m global subs) and Paramount Plus (78m) would leapfrog Disney+ (132m) but fall short of Netflix 325m global base. WBD said this week it expected to amass 160m streaming subs by end of the year. But it is engagement, not subscribers, that is the new battleground.
“The streaming growth story has shifted,” Barton says. “In most developed markets, subscriber growth is flattening. The new strategic focus is engagement: How do you increase time spent? How do you deepen franchise attachment? How do you maximise lifetime value per user?”
A reinforced HBO/Paramount competing with Netflix at global scale raises uncomfortable questions for Disney, Amazon, and NBCUniversal (Comcast). Disney+ may dominate with younger audiences but a combined HBO/Paramount library is would beat it in volume and diversity.
“These companies will be asking themselves: are we comfortable sitting in third, fourth, or fifth place while Netflix’s scale advantage grows even larger?” says Barton. “There may soon be a significant gap between the top two and the rest and we’re likely past the stage where companies can close that gap through organic growth alone. To catch up, you may have to acquire something meaningful. If you own attractive U.S.-facing IP, someone is almost certainly running the numbers on you.”
Not good news for Hollywood
While there may be fewer qualms among theater owners (or filmmakers like James Cameron who has been vocal in his concern) that the deal with two legendary studios will be disastrous” for cinema the merger could negatively impact the movie production ecosystem on the West Coast.
“There’s significant overlap, and to make this work efficiently in the American film industry, there will almost certainly be job losses,” Barton believes. “There will be ripple effects, and they’ll take time to play out. Ultimately, though, what the market needs is competition — particularly competition between scaled entities capable of investing heavily in great content. That’s where the real story lies.”
Barton thinks the streaming wars are entering a new phase — one defined less by land-grab subscriber growth and more by scaled competition between a smaller number of deeply capitalised entertainment platforms.
“In that environment, size and library depth matter more than ever,” he says. “Let’s be clear: bringing together overlapping studio operations in the U.S. will mean rationalisation. To make the numbers work, duplication across production, marketing, distribution and corporate functions will have to be addressed. In other words, there will be job losses.”
Cable biz still delivers
The bid is for all of WBD including its cable assets. Netflix may not have wanted to get into that business but Paramount with its legacy TV distribution should be able to keep revenue in the black.
“Don’t write off legacy TV just yet,” Barton says. “Linear television is in structural decline particularly among under-45s in the U.S but the story isn’t uniform.
“Local broadcast, especially regional news and community programming, remains resilient. It delivers something that streamers like Netflix, YouTube, or TikTok cannot: trusted, community-focused connection. Broadcasters are still investing in live production technology. That aligns with advertisers’ growing interest in targeting local audiences through trusted regional brands.”
One credible strategy, he suggests, would be spinning off U.S. broadcast networks into a separate entity— “grouping high-growth assets together while managing slower-growth businesses independently.
“These are still large, revenue-generating businesses producing hundreds of millions of dollars annually. Given some of the trends in local broadcasting, there may be a slightly more optimistic outlook than people assume.”
Concern for U.S news gathering
One of the biggest questions in the U.S is where this leaves CNN. Petty believes there will be possibly significant consolidation. “CBS has a substantial global news-gathering operation so there could be redundancies between CBS News and CNN. That said, CNN performs reasonably well on its own, even though cable news audiences overall are relatively small compared to other media categories.”
The bigger issue may be political direction. CNN is often perceived — particularly by the current White House — as strongly anti–Donald Trump. Meanwhile, CBS has recently been viewed by some critics as shifting its political tone closer to the administration. The question is whether CNN’s editorial independence can be maintained within the new corporate structure.
“There’s always a commercial imperative in these situations, and ultimately, business considerations tend to prevail,” said Petty, who added that it’s “more a matter of hope than guarantees” about CNN’s future editorial independence. “That uncertainty may not be reassuring for many within CNN,” he said.
Each regulatory authority including those in the United States will review the merger on its own merits. They’ll assess any competition or market concerns specific to their jurisdictions.
In some countries, there may be overlapping assets that raise issues. The process will likely resemble what happened when Disney acquired 20th Century Fox where regulators examined the deal country by country and required adjustments where necessary.
That’s the short-term industrial logic of consolidation in a maturing streaming market. The longer-term strategic question is whether Paramount Skydance leadership can turn that scale into advantage.
“If it’s managed competently, there’s enormous potential,” Barton says. “A strong management team could make all the consumer touchpoints truly hum with an IP library of this scale. Once regulatory uncertainty clears, you would hope leadership focuses on what really matters: distribution expansion, audience satisfaction, growing the appeal of key franchises, and doing the hard work of building a great entertainment business.”
He added, “There’s no doubt this could become an absolutely fantastic entertainment company.”
Gulf States land in Hollywood
The Paramount Skydance offer is being underwritten by state funding from Saudi Arabia and finance Abu Dhabi and the Qatar Investment Authority brokered through Jared Kushner’s Affinity Partners.
Reported first by Streaming Media, the funding was confirmed in December when congressional Democrats warned of a national security threat. In a filing with the Securities and Exchange Commission, Paramount said the three Middle Eastern funds as well as Kushner’s firm have “agreed to forgo any governance rights — including board representation — associated with their non-voting equity investments.”
The Gulf states and KSA in particular are seeking to engage beyond their borders with soft power. Last September, US games giant Electronic Arts was sold to Saudi Arabia’s sovereign-wealth fund PIF and Kushner’s Affinity Partners for $55bn.
After pouring substantial investment into building a domestic content production base spanning esports, video games, film and TV, KSA can now command a bigger stake in global sports and entertainment.
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