Shareholders of Warner Bros. Discovery (NASDAQ:WBD) were likely cheering on Wednesday as shares had their biggest single-day gain of 29%. Perhaps, it's sports fans who should also be cheering as a potential combination of Warner Bros. and Paramount Skydance (NASDAQ:PSKY) could create a sports juggernaut.
Paramount Skydance and Warner Bros. Discovery Sports Assets
After completing its merger earlier this year, Paramount Skydance acquired the seven-year rights to UFC from TKO Group Holdings (NYSE:TKO). The $7.7 billion deal landed the rights away from The Walt Disney Company's (NYSE:DIS) sports unit ESPN.
A potential combination of Warner Bros. Discovery and Paramount Skydance could better compete with ESPN, creating a new sports home for fans. This could potentially boost overall advertising revenue, offer opportunities to cross-promote platforms, and establish a universal streaming home, ultimately leading to higher prices.
Together, the two companies will have rights to games across the four major North American professional sports (MLB, NBA, NFL, NHL).
Paramount Skydance has rights to NFL games on Sundays that air on CBS and stream on Paramount+. Warner Bros. has rights to MLB games on TBS through 2028, NBA games for the 2024-2025 season, and NHL games on TNT, truTV, and streaming on HBO Max.
As part of a settlement, Warner Bros. will also have international rights to NBA games and access to highlights for content and will also produce the "Inside the NBA" show for ESPN when its NBA U.S. rights end after the upcoming season.
ESPN also has rights to MLB, NBA, NFL and NHL games in the U.S., but this could mark the biggest competitor to the long-running sports leader. This also comes as Disney is launching a new ESPN streaming app later this fall.
Outside of the four major North American sports, the two companies also have rights to plenty more sports content, including:
- UFC: starting in 2026
- Champions League: through 2029-2030
- NCAA Men's Basketball tournament: currently shares and would control the entire tournament together
- PGA Tour: including the Master's Tournament
- NASCAR
- US Soccer
- NCAA College Football Playoffs: simulcast under deal with ESPN
- Olympics: 2026 through 2032 in Europe
- Cycling
- Tennis
While a combination would require shareholder and regulatory approval, it's easy for sports fans to get excited about the potential combination. A deal could reduce the number of subscriptions needed if the combined company offers a sports plan or consolidates assets into a single streaming platform.
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New Paramount Skydance Making Mark Early
A potential bid for Warner Bros. Discovery, which was reported Thursday by the Wall Street Journal, would be a major move for Paramount Skydance, which recently completed a combination of its own.
The combination went through a lengthy process, including regulatory hurdles, before the deal was approved.
Paramount Skydance executives recently said the company would be making "painful" layoffs and completing restructuring that could exceed an original target of $2 billion.
The media company prioritized the theatrical model for movies over producing originals for streaming. With a lack of original movies, Paramount Skydance may have to rely on original series and sports content for Paramount+.
Paramount Skydance CEO David Ellison said at an event that for Paramount+ to achieve more engagement, a key metric, the platform needs more content.
“That means more stories, more series, more films, more sports to make sure that we can deliver those experiences to audiences, to have them spend more time on our hub,” Ellison said.
Stocks Hit New 52-Week Highs
Warner Bros. Discovery shares were up 29% to $16.17 on Thursday. On Friday, shares are up another 9.6% to $17.72, hitting new 52-week highs of $18.02 during the trading session.
Paramount Skydance stock is up 4.4% to $18.22 on Friday, with shares also hitting new 52-week highs of $18.65 during the trading session.
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