Paramount's $111 billion deal to acquire Warner Bros. Discovery creates a media giant that will reshape the streaming landscape.

"I just don't see why it would make sense to keep all of those [streaming services]," said our analyst Ross Benes on an episode of "Behind the Numbers." "Centralizing it does make it more attractive for marketers, probably simplify the proposition for consumers."

The deal, which beat out a competing bid from Netflix, still faces regulatory approval and shareholder votes. The combined entity will bring together streaming services HBO Max and Paramount+, news channels CBS and CNN, and major film franchises including Harry Potter and Transformers.

Why Paramount won the bidding war

Analysts say two factors drove Warner Bros. Discovery's decision to accept Paramount's offer over Netflix's bid.

• Financial superiority: Paramount offered $31 per share in an all-cash deal worth $111 billion—significantly higher than Netflix's $83 billion proposal.
• Regulatory advantages: The Paramount deal faces fewer antitrust hurdles because it preserves market competition rather than consolidating power into one dominant streaming player, according to our analyst Marisa Jones.

"Paramount is far less likely to see at least as many hurdles as Netflix would have, because it still preserves market competition at a much greater rate," said Jones.

Political alignment also potentially played a role. Paramount's David Ellison has existing ties to the Trump administration, and the FCC previously signaled that Paramount represented a preferable option from a regulatory standpoint, analysts said on the episode.

The streaming consolidation play

The combined company will create a streaming service with significant scale, though not without complications.

Approximately 50 million US subscribers currently have both HBO Max and Paramount+, according to EMARKETER's February forecast, meaning the actual combined audience will be smaller than simply adding the two subscriber counts together.

Even accounting for overlap, the new streaming service will gain millions of subscribers that neither platform had independently. And the merger also raises questions about the fate of other streaming properties in the combined portfolio, including Pluto TV, CBS All Access, Discovery Plus, and a planned TNT Sports app.

"I'd be surprised if Discovery Plus continues to be a standalone option two years from now," said Benes. "They could bring all that audience in one place."

Impact on the film industry

The merger of two of the five major movie studios raises concerns for analysts about reduced competition and employment opportunities in the entertainment industry.

Industry concerns include:

- Fewer potential buyers for scripts

- Reduced employment opportunities for actors and crew members

- Downward pressure on wages and prices paid for creative material

The Justice Department previously blocked Penguin Random House's purchase of Simon & Schuster in 2022 over similar concerns about reduced compensation for authors.

However, some producers view the Paramount deal as preferable to Netflix's bid because Ellison has committed to supporting theatrical releases. The company promised to release at least 30 films per year in movie theaters, addressing Hollywood's concerns that Netflix could diminish the traditional cinema model.

"I don't think either option was great for people in the movie-going business, but perhaps it is better [that Paramount won out]," Benes said. "So maybe there is a silver lining there for the people who work in film distribution specifically."

The Paramount-Warner Bros. Discovery merger offers several advantages for advertisers compared to the alternative Netflix acquisition.

More ad-supported distribution options: The deal maintains greater ad inventory across cable, theatrical releases, streaming, and broadcast, rather than consolidating everything into streaming-only distribution.

"Marketers do have, at the very least, more ad support environments and leverage as ad buyers with this deal," Jones said.

Simplified buying: The merger reduces the number of separate partnerships marketers need to establish, centralizing audiences in fewer places.

Aggressive ad push expected: Paramount relies heavily on advertising revenue, suggesting the combined company will aggressively court marketers with new opportunities, particularly in connected TV and streaming.

The real antitrust concern extends beyond streaming to the combined company's dominance in linear TV, where both companies maintain significant market share.

"When you add in their studio and their TV networks, it's going to be one of the largest media corporations in the world," Benes said.

Listen to the full episode.

This was originally featured in the EMARKETER Daily newsletter. For more marketing insights, statistics, and trends, subscribe here.