Paramount wants a streaming partner. Warner Bros. Discover is interested

Big global is in talks with other entertainment companies about merging its Paramount+ streaming service with an existing platform. If it reaches a deal, it could kick off a new wave of streaming partnerships that could put the entire media industry on a firmer footing.

According to insiders, Paramount Global leadership is currently in discussions with other executives from media and technology companies to determine whether a structure makes sense for both parties, where Paramount+ could be merged with another streaming service and potentially become jointly owned. They do not want to be named because the conversations are confidential.

One of the companies that has expressed a desire to reach a deal is Discovery of Warner Bros.According to people familiar with the matter. Combining Max and Paramount+ could strengthen both services by making them more competitive Netflix And Disney's range of platforms (Disney+, Hulu and ESPN) for eyeballs and future content.

Warner Bros. Discovery held preliminary merger talks for a deal for all of Paramount Global earlier this year, but talks did not escalate.

Paramount Global is also considering partnering with a technology platform, company co-CEO Chris McCarthy said at an employee meeting on June 25.

“What they don’t have is our scale of content, and together we’re going to be a very powerful combination to drive more minutes and bigger profits,” McCarthy said of a potential technology partner at the town hall, according to a transcript of the event obtained by CNBC.

A unified streaming service would reduce churn, as customers would get more variety in programming and fewer reasons to cancel each month. It would also wipe Paramount+’s losses off Paramount Global’s balance sheet by putting the company under new ownership.

Although a structure for a hypothetical joint venture with Warner Bros. Discovery hasn't been discussed in detail, the ownership would likely not be a 50-50 split given the existing nature of the streaming assets and their finances, according to people familiar with the discussions.

Warner Bros.' direct-to-consumer business Discovery generated $103 million in annual adjusted EBITDA in 2023, following a $2.1 billion loss the year before. Paramount Global reported a loss of $1.67 billion in direct-to-consumer operating revenue before depreciation and amortization in 2023, smaller than the $1.8 billion loss a year earlier.

Max has about 100 million subscribers worldwide, including 52.7 million in the U.S. Paramount+ closed the first quarter with 71 million.

from Comcast NBCUniversal has also expressed interest in a joint venture with Paramount+, as the Wall Street Journal reports. first reported earlier this year. The talks did not progress and never really got far, according to insiders.

“The sheer volume of hit content we could offer together would be enormous across TV, film and sports, and would attract millions of viewers,” McCarthy said at the meeting about the partnership with an existing subscription streaming service such as Max or Peacock. “In addition, we would share all other non-content costs.”

Spokespeople for Warner Bros. Discovery, NBCUniversal and Paramount Global declined to comment.

Since late 2019, traditional media companies including Paramount Global, Disney, NBCUniversal and Warner Bros. Discovery have all launched streaming services that have generated billions of dollars in losses.

There has long been an industry consensus that there are too many streaming services relative to the number of paying customers. Many executives have speculated that only four or five global services are likely to survive and thrive. The others should be consolidated or merged into existing platforms.

“There could be a combination of Paramount, Peacock and Max,” said Peter Chernin, former CEO and chairman of Fox Group, in a interview with CNBC last year.

Media companies are now focusing on better monetizing streaming content through bundles and partnerships. Disney and Warner Bros. Discovery have recently become more willing to license some of their content to competing streaming services, like Netflixto better monetize shows that don't add many new subscribers to their streaming services.

Comcast recently introduced a bundle of Peacock, Netflix, and Apple TV+ for cable, broadband, and mobile customers for $15 per month.

Disney and Warner Bros. Discovery have announced that they plan to bundle their streaming services starting this summer. While the companies have not yet announced a price for the package, which will include Disney+, Hulu and Max, the discount will be “significant,” according to one of the people familiar with the matter.

Another hot topic in the discussion is offering movies and TV series through different streaming services at different prices.

This was something Skydance Media was considering, which Paramount Global previously almost acquired The talks broke down last month.

Several media executives said privately that they expect Peacock, Paramount+, Max and Disney could eventually bundle their programming within one application to reduce confusion and compete with Netflix, which dominates the subscription streaming industry with approximately 270 million subscribers worldwide.

Two executives said Disney would be the most likely company to own the app, given its relative dominance in the entertainment streaming industry. Any media company that contributed content to the streaming app would get a share of the revenue, similar to how the cable economy works today.

Still, rivalries and tensions between companies can make such a product difficult to put together. While Max and Disney have entered into a bundling deal, Comcast and Disney have long had a tense relationship. The two sides are currently try to relax a joint venture — Hulu — to give Disney full control of the service that was initially jointly owned by NBCUniversal, Fox and Disney.

Disclosure: Comcast's NBCUniversal is the parent company of CNBC.