Paramount-Skydance Eyes Warner Bros. Discovery Merger as Streaming Losses Mount
Netflix's exit from the Warner Bros. Discovery bidding war has cleared the path for Paramount Skydance to acquire the media giant, setting up a combination of two legacy entertainment companies that have collectively lost billions while pivoting to streaming.
The potential merger, which requires regulatory approval, would unite two businesses that posted combined net losses exceeding $17 billion in 2024 alone. For finance chiefs watching the streaming wars, the deal represents a bet that scale—not profitability—remains the winning strategy in an industry where even the largest players struggle to make money on digital subscriptions.
Paramount Skydance reported full-year 2024 net losses of $6.19 billion, while Warner Bros. Discovery lost $11.31 billion over the same period, according to company filings. The carnage peaked in Q2 2024, when Paramount posted a staggering $5.4 billion loss in a single quarter.
The bleeding slowed in 2025, with Paramount narrowing its full-year loss to $621 million while WBD swung to a $727 million profit. But the trajectory remains concerning: Paramount posted losses in three of four quarters last year, including a $573 million loss in Q4 2025.
Laura Martin, an analyst at Needham & Company who covers entertainment and internet companies, said Paramount "must have" WBD to survive. The company is betting the merger will finally push its streaming business into the black through combined content libraries, theatrical releases, and licensing deals, while extracting more value from their declining cable operations.
The streaming math remains brutal. Paramount's overall streaming division—which includes Paramount+, Pluto, and BET+—posted an adjusted operating loss of $158 million in Q4 2025, even as Paramount+ grew subscribers from 77.9 million to 78.9 million quarter-over-quarter and increased revenue 17 percent year-over-year.
The merger would likely fold HBO Max into the Paramount+ platform, creating a combined subscriber base that could better compete with Netflix and Disney+. But the integration raises questions about how two money-losing streaming operations become one profitable one—a challenge that has eluded nearly every traditional media company that's attempted it.
Both companies remain heavily reliant on declining linear television networks, the cable bundles that once printed money but now face accelerating subscriber losses. The merger represents a defensive play: combining two weakening businesses in hopes that shared costs and bundled content can slow the decline.
For CFOs in the media sector, the deal underscores an uncomfortable reality: the streaming transition has destroyed more shareholder value than it's created, and the path to profitability remains unclear even for companies willing to spend billions on the pivot.
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