Warner Bros. Discovery, Inc. (NasdaqGS:WBD) Chief Executive Officer David Zaslav met with Paramount Global (NasdaqGS:PARA) Chief Executive Officer Bob Bakish on December 19, 2023 in New York City to discuss a possible merger, Axios has learned from multiple sources. Why it matters: The combination would create a news and entertainment behemoth that would likely trigger further industry consolidation.

Zaslav also has spoken to Shari Redstone, who owns Paramount's parent company, about a deal. WBD's market value was around $29 billion as of December 20, 2023, while Paramount's was just over $10 billion, so any merger would not be of equals. Details: The meeting between Zaslav and Bakish, which sources say lasted several hours, took place at Paramount's headquarters in Times Square.

The duo discussed ways their companies could complement one another. For example, each company's main streaming service -- Paramount+ and Max -- could merge to better rival Netflix and Disney+. It's unclear whether WBD would buy Paramount Global or its parent company, National Amusements Inc. (NAI), but a source familiar with the situation says that both options are on the table.

WBD is said to have hired bankers to explore the deal. Behind the scenes: One source familiar with the discussions says the strategy being considered mirrors Zaslav's blueprint for prior mergers. When merging with Scripps in 2018 and then WarnerMedia in 2022, Zaslav kept his core strategic team in place while retaining new creative talent leaders from the companies he acquired.

Executives are confident that the deal would receive regulatory approval, despite D.C.'s active antitrust climate. Notably, Warner Bros. Discovery doesn't own a broadcast network, which would clear an easier path than would a combination with a company like NBC owner Comcast.

A tax provision used to merge WarnerMedia and Discovery expires next year, which would legally allow WBD to explore another deal. Zaslav told investors last month that the company's cost-cutting measures and debt reduction now put it in a position "to allocate more capital toward growth opportunities." Paramount, WBD and NAI declined to comment. The bottom line: Talks between WBD and Paramount are still early and may not ultimately result in a deal.

But given the acceleration of cord- cutting and the growing encroachment of Big Tech on media, neither company can remain on the sidelines for long.