Background: Warner Bros. Discovery is the entertainment powerhouse behind HBO, CNN, as well as Warner Bros. Studios (the studio behind Harry Potter, Lord of the Rings, and Barbie). Warner Bros. Discovery was formed in 2022 after a $43 billion USD merger between WarnerMedia and Discovery.Meanwhile, Paramount Skydance is another recently $8.4 billion USD merged entity born from the union of Paramount Global and Skydance Media.

What happened: Paramount Skydance has reportedly offered $20 USD per share to acquire Warner Bros. Discovery, valuing the media giant at roughly $42 billion USD. The bid was backed by private equity firm Apollo Global Management, which would help finance the deal.

What else: Warner Bros. Discovery wasn’t impressed, calling the offer “too low.” But Paramount Skydance isn’t giving up just yet... it’s hinted at returning with a higher bid in pursuit of even more content scale.

What's the key learning?

💡In the streaming industry, scale means everything. It’s what allows companies to spread the massive cost of billion-dollar shows like House of the Dragon across a large subscriber base and lower the average cost per viewer.

💡Streaming giants like Netflix and Disney+ chase global expansion to maximise revenue per show. Smaller players, on the other hand, often face pressure to merge, like Paramount Skydance’s attempt to combine audiences and content libraries.

💡But scale doesn’t always mean profit. Warner Bros. Discovery might have a $42 billion USD offer on the table, but it’s also carrying $35 billion USD in debt... making that “Hollywood power couple” dream a little risky.