Paramount Global, taken over by independent producer David Ellison in August, is preparing a takeover bid for rival Warner Bros. Discovery. This transaction would mark Hollywood's largest consolidation since Disney's $71 billion acquisition of Fox's entertainment assets in 2019.

On September 11, Paramount has reportedly hired investment banks to prepare for the acquisition bid, though formal negotiations with Warner Bros. have not yet begun. The deal would be an all-cash acquisition, with specific terms not yet disclosed.

The acquisition plan is backed by the Ellison family's financial resources. David Ellison's father, Larry Ellison, co-founder of Oracle Corporation with a net worth of $383 billion, ranks as the world's second-richest person.

Markets reacted swiftly to the news. Warner Bros. stock soared nearly 29%, while Paramount shares, after a brief decline, turned upward with gains exceeding 15% to $17.46.

**Warner Bros. Split Plan Faces Obstacles**

The transaction's success largely depends on Warner Bros. CEO David Zaslav's decision-making.

Warner Bros. announced plans in June to split the company in two, focusing separately on cable television and streaming/studio operations.

Zaslav believes that after divesting debt-heavy cable networks, the value of streaming and studio assets would be fully realized.

To close the deal, Ellison would need to propose an offer compelling enough to convince Zaslav that an immediate sale is more advantageous than waiting for the spinoff.

**Merger Prospects of Two IP Giants**

If completed, this would represent Hollywood's largest industry reshuffling since Walt Disney Company's $71 billion acquisition of Fox's entertainment business in 2019, reducing the number of major traditional U.S. media studios from five to four.

The merged entity would own some of the industry's most recognizable film and television IP assets. Paramount's portfolio includes the "Mission: Impossible" franchise, "The Godfather," and hit TV series "Yellowstone."

Warner Bros.' library encompasses the "Harry Potter" series, "Batman," "Casablanca," and other classics, plus HBO productions like "The Sopranos."

Additionally, this merger would integrate both companies' massive production facilities in Southern California, further solidifying their physical advantages in content creation.

Both companies operate film and television studios, cable channels, and streaming services. Paramount owns CBS, MTV, and Paramount+, while Warner Bros. operates CNN, HBO, and HBO Max.

**Industry Pressures Drive Consolidation Wave**

Behind this potential acquisition lies the severe challenges facing the entire traditional media industry.

In recent years, with the rise of streaming platforms like Netflix and Google's YouTube, traditional media companies are continuously losing pay-TV subscribers and advertisers, while theater attendance continues to decline or stagnate.

To combat these impacts, major media companies including Warner Bros. have undertaken business restructuring, placing paid streaming at their strategic core.

However, this transformation process comes with enormous pressure from investors demanding streaming businesses achieve profitability quickly, leading companies to cut content production spending and lay off thousands of employees.

Furthermore, Hollywood's writers' and actors' strikes over the past few years caused production shutdowns for months, impacting companies' recent financial performance.

Against this backdrop of industry-wide pressure, seeking restructuring and divestitures has become a trend.

Beyond Warner Bros.' planned split, Comcast Corporation, one of America's largest cable and broadband providers, has also announced plans to spin off its television networks including MSNBC, USA, and CNBC.

Comcast, parent company of NBCUniversal, expects to complete the spinoff of these networks by year-end, with the new company to be named Versant Media Group.

These moves indicate that traditional media giants are actively adjusting their business structures, attempting to focus on core operations by divesting slow-growth assets to survive and thrive in fierce market competition.