Warner Brothers Discovery is reportedly investigating the possibility of a merger

Shares of Warner Brothers Discovery experienced a decline of over 5 percent on Wednesday following reports that the entertainment conglomerate is considering a merger with its competitor, Paramount Global.

According to Axios, citing sources who chose to remain anonymous, Warner Brothers Discovery CEO David Zaslav and Paramount Global head Bob Bakish engaged in several hours of discussion about the potential merger. The meeting, which occurred on Tuesday in New York, was described as exploratory and left the outcome of these talks uncertain.

Zaslav has also reportedly been in communication with Shari Redstone, the owner of Paramount’s parent company, regarding the possibility of a deal.

Warner Brothers Discovery’s portfolio includes well-known brands such as CNN, HBO, and its film studios, while Paramount Global’s assets encompass its namesake movie studios and the CBS broadcasting group.

During their discussion, Zaslav and Bakish explored ways in which their respective companies could synergize, particularly by merging their streaming services to form a stronger competitor against giants like Netflix and Disney+.

Based on Wednesday’s closing share price, Warner Brothers Discovery had a market value of approximately $28.4 billion, significantly surpassing Paramount Global’s valuation of around $10.3 billion.

Warner has reportedly engaged bankers to assess the feasibility of an acquisition.

Such a major merger could potentially trigger further consolidation in the media sector and would likely attract considerable attention and regulation from U.S. authorities.