After months of market speculation, Warner Brothers Discovery announced yesterday that it will explore the sale of its media holdings.
The announcement is significant. CEO, David Zaslav, had his own plan to bifurcate its cable and streaming services and reportedly dismissed a previous offer. Given Warner Bros’ announcement, we now know that the company is for sale and Zaslav’s division of content is less likely. This should comfort investors, since Warner Bros. has faced significant financial headwinds.
The decision marks a pivotal moment for the news and entertainment landscape. Warner Bros., one of Hollywood’s most iconic studios, boasts a deep content catalog, an influential but shrinking portfolio of cable channels, and respected production capabilities. Where those assets ultimately land could reshape competition in the streaming market for years to come.
Last month, Paramount-Skydance reportedly offered to acquire Warner Bros. in full—an ambitious deal that could create a combined company strong enough to challenge streaming leaders like Netflix and Amazon Prime. While less is known about the other possible buyers, media is reporting that Amazon, Netflix and maybe Comcast are among the “multiple parties” considering an acquisition of Warner Bros., either in part or whole.
In simple terms, Paramount’s offer is a bid to combine the “little guys” into a force that could compete with their much larger counterparts, more so than other potential bidders. Both Paramount and Warner Bros.’ streaming platforms account for two percent or less total TV viewership. Their combined share—coupled with the impressive content catalogues each brings to the table—would give consumers a viable alternative to the streamer giants.
Recent research from the American Consumer Institute underscores why such a merger could benefit consumers. In industries with high fixed costs, like streaming, consolidation often generates economies of scale that allow firms to compete more effectively against dominant incumbents. In practical terms, that means broader content libraries and stronger consumer offerings. Yet if antitrust enforcers focus narrowly on firm size rather than competitive outcomes, they risk repeating past mistakes.
While in different industries, the Department of Justice’s success in blocking the proposed JetBlue–Spirit Airlines merger is a cautionary example. Regulators argued the merger would reduce competition by combining two low-cost carriers. Instead, both companies struggled to compete without the increased economics of scale. Spirit ultimately filed for bankruptcy, and JetBlue now faces similar challenges—leaving consumers with fewer options and higher prices. Antitrust enforcers should be careful to learn from past mistakes when it comes to procompetitive mergers.
Paramount’s and Warner Bros.’ cable offerings complement one another, which promises to foster competition, not kill it. The companies’ cable operations focus on different viewers and provide a wide variety of content, giving the resulting company latitude to continue to innovate and invest, benefiting creators and consumers. Paramount’s interest in keeping Warner Bros.’ cable services under one umbrella—rather than carving them out, as Warner Bros. proposed—would provide the stability necessary to keep the division above water.
Combined with recent announcements from competitors, it means a merger would likely be procompetitive. This summer, Disney announced with would combine its content catalogues from Disney+ and Hulu into a single offering. This signals that there may be a competitive advantage for a one-stop-shop streaming platform, as opposed to more niche offerings. Given the recent development and multiple offers, the company should consider the benefits of a wholesale despite the original plan for division.
Mergers of this scale will likely draw scrutiny from antitrust regulators regardless of the buyer. However, as history and economics has shown mergers between midsized or smaller competitors can create a unique opportunity to compete against industry giants. For Warner Bros., Paramount, and policymakers alike, the focus should remain where it belongs—on ensuring consumers benefit from a stronger, more dynamic streaming marketplace.
