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For Loss-Making Paramount+ and Peacock, a Merger Makes Sense—but not Necessarily with Each Other

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After courting WarnerBros. Discovery and AppleTV, Paramount is now eyeing up Comcast for a potential union of its streamer Paramount+, in this case with Peacock. Or it could be the other way around: Paramount Global has some hot properties making it attractive to rival streamers in a bid to compete better with Disney and Netflix.

Talks are still in the early stages, reports the Wall Street Journal, which broke the news, adding that the partnership would help Comcast and Paramount “produce significant cost savings—from spending on programming to marketing.”

Neither service has turned a profit. At the end of last year, Peacock had 31 million subscribers and Paramount+ had reached more than 63 million global subscribers. By contrast, Netflix has over 260 million global subs and Disney 150 million.

Paramount Global posted a $238 million loss from its streaming division its last quarter to November 2023 (it will report fourth-quarter 2023 earnings on February 28).

Peacock added 3 million new Peacock subscribers during its last quarter but still lost $825 million, in what execs called the streamers’ peak loss-making period.

There are benefits for both streamers in joining forces to streamline operating costs and give subscribers more of a reason to buy one combined app than two separate ones.

Both have coveted content assets. Notably, Paramount and NBCU were the two major studios not included in the recent announcement of a sports-centric mega-app between Disney, Fox, and WBD.

CBS Sports’ flagship sports are the AFC package of Sunday afternoon games (until 2033). CBS also holds rights to soccer leagues, including Italy’s Serie A and UEFA Champions League in the U.S., with NFL, soccer, and other sports also streamed live on Paramount+.

NBC Sports is the home of Sunday Night Football until 2033, streaming matches live on Peacock; and for this summer’s Olympics in Paris, NBC says it will stream every event live on Peacock in a first for a Summer Games in the U.S. The streamer will also carry all NBC Olympics programming, curated video clips, virtual channels, and exclusive original programming.

In its Q4 statement, NBCU credited NFL and Big Ten football games for growing its subs numbers and reducing losses at Peacock, clearly showing that sports are its prized assets.

Just as there was speculation that the Disney, WBD, and Fox pact was announced to put pressure on Comcast, could the reverse be true and either Paramount or Comcast are signalling engagement with another as a bargaining chip in negotiations to join the wider sports fold?

Peacock also holds exclusive first streaming rights to Awards Season juggernaut Oppenheimer made by stablemate Universal.

Nonetheless, Paramount comes with a larger library of drama including from Showtime and CBS material helping to propel it to second place behind Disney of major studios licensing content to streamers.

Ampere Analysis reveals that the number of TV seasons cross-licensed between Netflix and WBD’s Max and Discovery+ more than tripled in 2023, although Paramount’s number of shows, 72, was less than half that of Disney. Yet six of the 20 most popular titles in Paramount Global’s vault are in the Star Trek franchise and kept in-house.

As Ampere noted, “Studios are understandably reluctant to give up exclusivity for major franchises as they built their streaming services.

Any deal to combine SVODs would also lay the foundation for Paramount Global to merge with Comcast. Comcast president Mike Cavanagh reiterated late last year that the “bar is very high” for the company to pursue any deals. “Our job always is to look at things, but all I can say is the bar is really high because I really like the organic hand we have,” he explained. “We don’t need to do anything inorganic acquisition-wise.”

The two companies also already joint venture partners in European streaming service SkyShowtime. Launched in 2022, it targets European markets such as Nordics, Netherlands, and Portugal that weren't already being served by Peacock or Paramount+.

Paramount Global has also been the subject of M&A speculation from Skydance Media and month the Allen Media Group.

AdWeek describes the current landscape as streaming's “messy era.” It expects more consolidation, bundling and licensing in 2024 “as streamers and networks reach across the aisle to fight fragmentation and reduce churn.”

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