Investing.com - Paramount Global (NASDAQ:PARA) is currently in discussions with other entertainment companies about merging its Paramount+ streaming service with an existing platform. If successful, this could trigger a wave of similar partnerships across the media sector and strengthen the industry as a whole.
The leadership at Paramount Global is actively exploring potential structures for merging Paramount+ with another streaming entity, potentially leading to a co-owned platform. These discussions, which are private, involve various media and tech company executives.
Warner Bros Discovery Inc (NASDAQ:WBD) has shown interest in such a deal, which could strengthen both services by allowing them to better compete with Netflix Inc (NASDAQ:NFLX) and Disney’s suite of platforms (Disney+, Hulu, and ESPN) for audience and future content.
Earlier this year, preliminary merger talks were held for a complete deal with Paramount Global, but these discussions did not progress.
Paramount Global is also considering a potential partnership with a technology platform, as revealed by the company's co-CEO Chris McCarthy at an employee town hall on June 25.
A merged streaming service could offer more diverse programming, reducing customer churn and potentially removing Paramount+ losses from Paramount Global’s balance sheet by introducing new ownership.
While the structure for a potential joint venture with Warner Bros. Discovery hasn't been discussed in detail, it is likely that ownership wouldn't be evenly split due to the current nature and finances of the streaming assets.
Max, Warner Bros. Discovery's direct-to-consumer business, boasts about 100 million global subscribers, with 52.7 million based in the U.S. Meanwhile, Paramount+ ended its first quarter with 71 million subscribers.
NBCUniversal, owned by Comcast Corp (NASDAQ:CMCSA), has also shown interest in a joint venture with Paramount+. However, these discussions did not progress significantly.
Since late 2019, traditional media companies including Paramount Global, Disney, NBCUniversal, and Warner Bros. Discovery have all launched streaming services, resulting in billions of dollars in losses. The industry consensus suggests there are too many streaming services relative to the number of total paying customers.
If Paramount finalizes a joint venture with either Max or Peacock, it could put pressure on the remaining service to seek a similar deal.
Media companies are now focusing on better monetizing streaming content through bundles and partnerships. For example, Disney and Warner Bros. Discovery have recently become more willing to license some of their content to rival streaming services, such as Netflix, to better monetize shows that aren't adding a lot of new subscribers to their streaming services.