Paramount (PARA) has held discussions with Comcast (CMCSA), owner of NBCUniversal, about a potential streaming deal, according to a report from The Wall Street Journal. The talks center around developing a potential partnership or joint venture between the companies' streaming services, Paramount+ and Peacock. The talks come as questions swirl about Paramount's future, which includes reports about it being sold to a group of investors being led by SkyDance Media and a buyout offer from billionaire Byron Allen.
Yahoo Finance's Alexandra Canal reports the breaking details.
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Editor's note: This article was written by Stephanie Mikulich
Video Transcript
- We have breaking news from the streaming world. According to the "Wall Street Journal," Paramount and Comcast are in talks to join forces in a new streaming venture, adding to the trend of consolidation in the sector. We have our very own Alexandra Canal here with the latest. So these two streaming apps potentially under one roof, what do we know?
ALEXANDRA CANAL: Yes. So this is a report from the "Wall Street Journal." I reached out to both companies for comment. They have not gotten back to me at this point, but Paramount, it hosts a decent amount of content. We have the "Taylor Sheridan Universe." We have "Star Trek." And you can also simultaneously watch NFL games that are on CBS on Paramount Plus.
Then if you take a look at Peacock, they have shows like "The Office." They also have a big live sports presence with soccer and football. So you think that the combination of this would leverage the opportunity for both of these companies to just have more content under their roof in addition to more live sports. And live sports has really been viewed as the last frontier of the streaming wars.
This comes on the heels of that joint venture announcement between ESPN, Warner Brothers, Discovery, and Fox. And when this first broke, initially, I thought, OK so this is in response to that. It seems like to me because at the end of the day, there's a lot of debt for these companies, especially when it comes to their streaming ambitions. This could be a way to help with cost savings, but at the same time, Paramount is one of those companies that has been floated around as a potential acquisition target.
We've heard Byron Allen has made a bid. Reportedly our parent company Apollo Global is interested, Skydance Media. So there's a lot of interest in Paramount as a company for its assets, for its film business, and even for Paramount Plus.
So if you were to combine Peacock with Paramount Plus, I wonder how that could shake up the M&A landscape as well? But we're seeing both of those stocks down right now. The broader market is lower as well, but just interesting to see even more consolidation in the space. And it seems like once again the big driver of this is sports.
- Well, you mentioned that the market reaction is a little muted. And it is a down day so far, but I'm curious whether or not this is an indication that the Street is maybe not thrilled about this news, or do you think that it's more just a wait and see if we have more information moving forward? It looks like, again, all of the names that we've been talking about are down today, but 1.8% on relatively good volume for Paramount in the red makes me think that there's something bigger here.
ALEXANDRA CANAL: I think there's a wait and see, but I also-- you have to remember, a lot of these companies are legacy media companies, right. So if you focus more energy on sports, you create these joint ventures. And the emphasis is, OK, we want to drive people to watch sports on our streaming platforms, not on linear. That is risky because at the end of the day linear is still profitable, right.
It's declining massively within cord cutting, but it's also what's powering a lot of the streaming business. So I think when you have a company like Paramount that has a lot of linear network exposure and they want to drive more people to streaming, that's automatically a red flag to investors. Well, what does that mean for their bottom line moving forward? So I think that's one thing.
Another question mark is, what is all this going to cost the consumer, right? We don't know what the ESPN, Warner Brothers, Discovery, Fox, joint venture is going to cost. If we see a combo here, is that going to be an increase in cost?
What does that mean for average revenue per user or ARPU, which is a big profitability metric? So still a lot of unknowns here that I think, investors, they want some clarity on, but 2024 is the year I think that we're going to see some dealmaking in this space or at least set us up for some serious moves in 2025. And clearly, these reports are just the start of that. A great beat for you, Ali.
- A lot going on, always busy.
- A busy day. And, of course, those lucrative sports ad dollars and licensing.
