Paramount Skydance (PSKY) CEO David Ellison said combining the linear TV businesses of Paramount and Warner Bros. Discovery (WBD) will allow them to compete longer as the industry transitions to digital.
“There are incredible brands across the combined linear portfolio that we really do believe in being able to transition to a digital future,” Ellison said, according to The Wall Street Journal. Ellison added the merger will “keep the portfolio healthier and prolong the life for longer than they would have as standalone businesses.”
Ellison is the son of Oracle (ORCL) founder Larry Ellison, who is providing financial backing for the deal.
WBD had intended to spin out its cable network assets into a publicly traded company called Global Discovery later this year. Under its new merger agreement with Paramount, those assets will remain in-house.
WBD agreed to a takeover bid by Paramount last week, bowing out of a previously agreed-to merger with Netflix (NFLX). The Paramount bid is being backed by Oracle stock controlled by Ellison’s family.
Seeking Alpha analyst Max Greve said that while Paramount’s merger with WBD should be “transformative,” it carried risks such as a $71B debt load, uncertainty about the health of WBD’s assets, and “unique margin call risks” due to Oracle being an AI stock.
“I still think that the original Paramount had all the tools it needed to succeed. This is a company with fantastic assets that has been horribly mismanaged. Merging it with another mismanaged company won’t necessarily fix that,” wrote Greve in an article posted Monday.
“Even if you think the merger itself is good, the debt load is a major concern, as is the unique AI exposure I described,” he added.