Merger meeting? WBD’s David Zaslav and Paramount Global’s Bob Bakish sit down to discuss a possible deal; “For now,” said the source

Deadline confirmed that Warner Bros. Discovery and Paramount Global were in talks about a possible merger.

Paramount Global CEO Bob Bakish and WBD boss David Zaslav sat down at Paramount’s Times Square headquarters in New York on Tuesday. A well-informed source told Deadline, “It was all pretty preliminary,” the source said of the talks. Shari Redstone, CEO of Paramount’s controlling shareholder National Amusements, “is on a listening tour to see what she can get if she decides to sell all or part of the company,” he added.

Two other people with knowledge of the discussions confirmed this to Deadline.

Deadline reported in recent days that Redstone, after years of holding together her family’s empire, was open to offers for National Amusements and Paramount assets from suitors including Skydance and RedBird Capital.

Redstone was not in the room with Zaslav and Bakish at the actual meeting, the source said. She had a separate conversation with Zaslav this week in which the role of broadcaster CBS in a possible future deal was a big topic.

As a broadcast network affiliated with 28 stations in many markets, CBS is an important asset, but also a legacy. Given recent rumors that Disney may divest ABC and its networks — though the company recently said it was reconsidering — and other moves, the idea that CBS and the networks would not own the rest of Paramount’s portfolio would make sense . Private equity funds are increasingly looking at local broadcasting as an area of ​​interest.

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Wall Street did not immediately respond to Axios’ initial report on the negotiations. WBD shares fell nearly 6% during the regular trading day and were essentially flat in after-hours trading. Paramount fell 2% and continued to decline after the session.

Warner Bros. Discovery was only able to enter into a deal after a two-year lock-up period following the WarnerMedia-Discovery merger in April. This was agreed as part of the Warner Discovery deal, which was done through a Morris reverse trust that offers certain tax benefits. Many dealmakers have marked April 8 as WBD who is likely to make changes to his portfolio.

News of the talks emerged shortly after Bloomberg reported that Paramount was also discussing the possible sale of BET Media, which includes cable channels BET and VH1 as well as studio and streaming operations. Potential buyers include Byron Allen and a group of investors led by Scott Mills, CEO of BET, and Shinh Chu, CFO of CC Capital Partners. Paramount previously explored selling BET, but withdrew after determining that the bid was too low.

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Both WBD and Paramount face significant debt issues and high costs for anyone looking to compete in the streaming space. Since WarnerMedia’s $43 billion merger with Discovery closed in April 2022, investors have flagged the company’s debt as a concern. Against the backdrop of increasing cable cuts, many cable television systems have also been bundled. The shares of the merged company were trading well below their price when the deal was signed.

Similarly, Paramount’s reunification of CBS and Viacom was not well received on the Street, with shares falling to single digits earlier in the year and remaining nearly two-thirds below where they were at the time of the Viacom-CBS deal in 2019.

WBD and Paramount Global declined to comment. A representative for National Amusements did not respond to a request for comment.

Axios had the first report on the talks.