Over the past couple of months, Paramount Global’s (PARA) – Get Free Report stock has rebounded nicely after bottoming out for the year in early November. Year to date, shares are still down more than 10%, but they were down triple that amount just a few weeks ago.
What’s been the elixir for the stock?
Related: Paramount surges on report it’s in talks to bundle streaming service with Apple
Over the past few weeks there have been reports that the media conglomerate behind CBS, Showtime, MTV, Comedy Central and other channels is exploring a sale.
On Wednesday, CNBC reported that Paramount has held preliminary talks with Warner Bros. Discovery (WBD) – Get Free Report about a potential merger.
Over the past few years as network viewership continues to decline and people move to streaming options and away from the traditional television networks, the media industry has responded with consolidation.
Disney (DIS) – Get Free Report and Fox and AT&T (T) – Get Free Report and Warner Bros. Discovery have been two of the biggest media mergers over the past five years, and both mergers have been near disasters for all parties involved.
Warner Bros Discovery is still trying to gain its footing after AT&T spun off its media assets following the close of its $43 billion takeover of Warner. While Max, the streaming app that features both Discovery and Warner content, was launched earlier this year, the company has been shelving projects and cancelling shows left and right in order to get into the black.
Meanwhile, Disney has had its own multitude of problems since it took over Fox’s non-sports and news entertainment assets.
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While none of Disney’s issues are directly tied to its Fox assets, the films and television shows it got in the deal have not been game changers for a company that is struggling to sell subscriptions to its streaming product (at least in the North America market) all while relying on content from Marvel and Star Wars that is resonating with fewer and fewer with fans.
Investors may be catching on to the idea that mergers don’t automatically fix everything that’s wrong with a struggling media company because Paramount Global shares are down 1.8% Thursday on news of the Warner Bros. discussions.
Either way, the traditional network structure seems to be on life support as the world moves towards streaming.
Major cable providers lost about six million paid TV subscribers each year from 2019 to 2022, and the trend isn’t slowing down. More than 2.3 million people cut the cord in the first quarter of 2023 alone, according to some estimates.
As of the end of the first quarter, U.S. pay TV services had 75.5 million , a 7% decline on an annual basis.
While the movement was meant to save consumers money on their entertainment, recent cost increases across the industry have pretty much killed that dream.
Hear me out: We bundle them all together, offer a discounted price, and call it cable. pic.twitter.com/P3DzHrz6aJ
— Ramp Capital (@RampCapitalLLC) August 16, 2023
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