Can David Ellison Break Hollywood’s Mega-Merger Curse?
AT&T paid $85.4 billion for Warner Bros. and failed to create value. The Walt Disney Company paid $71.3 billion for 20th Century Fox, and analysts still debate whether it was the right move. Discovery forked over $43 billion for Warner Bros. and is now selling. David Ellison’s Paramount Skydance is now committing $111 billion for the same asset. Yes, there has often been sound business logic behind major media mergers in recent years. But they consistently disappoint because properly integrating all those moving parts—creative, financial, cultural, etc.—is really damn hard, time-consuming and expensive.
“Large media mergers rarely disappoint because the strategy lacks logic. They disappoint because asset scale is easier to combine than operating models,” M&A integration expert and NYU instructor Klint Kendrick told Observer.
WarnerMount, ParaBros, or HBO-CBS (whatever they end up calling themselves) now has a war chest of blockbuster franchise IP, a roster of recognizable and popular network brands, a hefty collection of news and sports, a nine-figure streaming subscriber count, a ton of production space and global distribution infrastructure, and a backdoor into TikTok’s algorithm—thanks to the acquisition of the social app’s U.S. operations spearheaded by David Ellison’s father, Larry Ellison. It’s also the company with the greatest exposure to declining linear assets, a harsh debt load, a whole host of redundancies, conflicting KPIs and hierarchical Jenga dynamics.
Can it work? Absolutely. Will it work? It depends entirely on execution.
The question of finding a new identity
Beyond the cavernous combined libraries, WBD delivers roughly 80 shows per year across in-house and third-party platforms, while Paramount Skydance delivers around 120. While those numbers may come down as a singular company, the new entity will be the most powerful content arms dealer on the market.
The mountain of debt from the transaction ($79 billion) will necessitate an ocean of licensing revenue. But that scale gives the company immense leverage at the negotiating table. It may be able to rewrite the rules of engagement in TV free agency with higher license fees, shorter lending windows, and smaller incremental payouts.
“If Paramount spins cable assets, repositions them, or leans into scaled third-party studio supply, the financial logic may hold,” Kendrick said. “The execution question is whether leadership rapidly resets decision rights and aligns incentives around IP profitability rather than legacy linear benchmarks.”
Paramount is sitting pretty from a content-volume standpoint. But how do Warner Bros.’ fantastical franchises blend with Paramount’s slightly more earthbound blockbusters? Does HBO’s elevated prestige mesh alongside CBS’ engineered accessibility? Can Nickelodeon, Cartoon Network, CNN and CBS News realistically co-exist under the same roof?
“Paramount’s biggest problem isn’t their content. It’s their identity,” Tracy Lamourie, media strategist and founder of Lamourie Media, told Observer.
On the theatrical side, the combination offers headache-reducing stability but doesn’t necessarily yield a huge ceiling increase on paper, according to Greenlight Analytics, where I work as Director of Insights & Content Strategy.
Evaluating which brand assets to emphasize and which to reduce will be a painfully necessary process. Along the way, developing a true brand identity will be crucial. What defines a ParaBros film? Coherence is needed for dealmaking behind closed doors and audience perception. What should subscribers expect from and associate with an HBO Max-Paramount+ original streaming series? What are you known for?
Between Washington and Silicon Valley
For months, the entire media industry has banged the drum about the Ellison family’s close ties to the Trump administration. Yes, that should, in theory, grease the wheels of this merger. But are we sure there aren’t any U.S. regulators who might consider the consolidation of CNN and CBS news, a dominant 35 to 40 percent cable TV market share under one umbrella, and Middle East money backing this deal to be worth a second look? What about European regulators who may be itching to throw a wrench into American media plans? Either way, expectations are that the deal won’t close for anywhere between six to 18 months.
Paramount now has a stockpile of scaled assets. But its ravenous spending must be followed by strategic discipline and brand clarity. The risk is collapsing under the weight of all that ownership. Anything short of surgical precision in execution threatens to derail what could be a transformative new era.
In one way or another, trillion-dollar companies Apple ($3.78 trillion), Google ($3.63 trillion), Amazon ($2.32 trillion) and Meta ($1.64 trillion) have all entered the content game in the 21st century. This has left legacy media companies such as Paramount Skydance ($13.4 billion), Warner Bros. Discovery ($69 billion) and even the Walt Disney empire ($178.6 billion) at a distinct disadvantage, especially when it comes to pouncing on attractive assets.
Google snatched up YouTube (and, more recently, NFL Sunday Ticket), Amazon could easily afford to overpay for MGM (and Thursday Night Football), and Netflix almost snagged WBD. Wall Street has never put as much pressure on tech stocks to deliver immediate profits, allowing their entertainment divisions to operate at a loss for extended periods. Legacy media does not receive the same gentle treatment.
Driven by the endless pockets of Big Tech, going it alone has become more financially fraught than ever before. But this era of consolidation will not be won simply by acquiring the shiniest toys available. Instead, those who know exactly what they’re selling and how to endure a war of attrition are best positioned for the future.